The deputies of the British parliament went on a winter break, but political battles about the prospects for Brexit continue to shake the market. The pound is still under the background pressure of this issue, while the European currency in recent days feels more confident.
The weekly chart of the euro/pound cross-pair indicates that the price is in the ascending channel during the last month. If at the end of November the pair was trading in the area of the 88th figure, at the moment it is gradually approaching the border of 0.91. Relatively deep correctional pullbacks allow traders to open long positions at a more favorable price, although the growth dynamics of EUR / GBP leaves much to be desired. However, in the context of medium-term trade, this tactic is very attractive, given the continuing uncertainty around the prospects of the "divorce process".
Let me remind you that Theresa May postponed the vote on the draft transaction because of the potential lack of votes in favor. Later, the prime minister appointed a new voting date, January 14, but the number of supporters of this agreement did not increase. Moreover, after Brussels refused to provide any guarantees about the timing of the backstop, many parliamentarians were convinced of the correctness of their position. According to political analysts, the balance of power in the British parliament after May's European voyage did not change. But the prime minister needs to convince not only his party members to support her draft deal, but also ten more deputies, since the conservatives have lost a parliamentary majority on the results of the last election. The task is unbearable because the main parliamentary forces of Britain (in addition to some of the conservatives), Labor, Unionists, and representatives of the Scottish National Party, opposed the deal.
The remaining political parties (the Liberal Democrats, the Irish Sinn Fein Party, the Wales Party, and the Greens) are unable to drastically influence the situation because of their small number in parliament. Only representatives of the Liberal Democratic Party are able to "replace" the temporary allies of the Conservatives - Unionists but they strongly oppose the proposed deal. Moreover, not so long ago, the Liberal Democrats declared that they were ready to support a vote of no confidence in the prime minister if their colleagues from the "big opposition" put this question to the vote. Therefore, there can be no talk of any possible support from them.
Thus, traders are anxiously awaiting the January events. In the autumn, there was still hope that May would play the trump card of his position, the essence of which boils down to the absence of any alternative. Many experts expected that the deputies at the last moment would falter and vote for a "bad" deal since on the other side of the scale there would be chaotic Brexit with disastrous consequences. Alas, these expectations were not justified: on the eve of the voting day, May was convinced that the parliament was ready to go for a harsh scenario. Even the results of the consideration of the vote of no confidence in the prime minister did not inspire her supporters, 117 conservatives voted in favor. Catastrophic much in the context of the upcoming voting in January.
It is for this reason that the option of a repeated referendum has been discussed in the information space over the past weeks. According to the results of a poll conducted by YouGov, 47% of respondents do not approve of leaving the EU, while 41% positively reacted to this idea (the rest were undecided). When sociologists put an "edge question", that is, in the context of a possible new referendum, the numbers turned out to be more categorical: 45% of Britons would vote to continue EU membership, while 30% of respondents were in favor of withdrawal. And such an advantage has been observed for several months already, which allows us to put an "equal" sign between the idea of a repeated referendum and the preservation of Britain within the European Union. By the way, the European Court of Justice in early December ruled that the United Kingdom could cancel Brexit unilaterally, without the consent of other European states. This decision allows to legally implement the results of the repeated referendum if the British really say "no" to the country's withdrawal from the EU.
Most experts linked the possible scenario of a new referendum with the Labor Party, but just a week ago, the leader of the British opposition, Jeremy Corbyn, denied such thoughts. He said that the Labor Party will continue the course of leaving Britain from the Alliance. "We will try to change the terms of the deal if we win the early elections next year," Corbyn said. According to the British press, there is also a split among the Laborites, many are in favor of another vote, but most do not support this idea. This position has disappointed supporters of the re-referendum since now they have to lobby for this idea either outside the parliament or with the help of the so-called "small opposition".
Thus, after an unexpected statement by the Laborites, the probability of a new referendum has noticeably decreased. But the chances of the chaotic Brexit are growing every day. Only three months are left until March 29, and "it's still there". The prime minister has no support either inside parliament or from European colleagues.
All this suggests that the cross-pair EUR / GBP has the potential for its further growth. The closest target of the northern movement is the mark of 0.91, this is the upper line of the Bollinger Bands indicator on the weekly and monthly charts. The support level is the price of 0.8960, the upper limit of the Kumo cloud on the W1.
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