EU Summit: what does it mean for the GBP?

EU Summit: what does it mean for the GBP?

The main focus for all traders of the British pound will be on the European Summit. The European leaders will decide on the prolongation of the Brexit process today. The summit will start at 19:00 MT time and may continue until Thursday’s early hours.

According to analysts, the most widely expected extension is going to be until December 31. At the same time, reportedly the EU is ready to suggest the 1-year extension until March 2020.  As we know, the British Prime Minister Theresa May does not want such a long extension, as she thinks that it’s a destructive move against the British economy. Instead, she wants to request an extension until June 30. This decision is seen as too risky for the current path of the Brexit process due to the disapproval of Theresa May’s deal at the Parliament.

As the uncertainties about Brexit decision keep circulating, the length of the UK divorce process from the EU will determine the direction of the British pound.  

What are the possible scenarios?
  • If the EU members agree on a short-term extension, the GBP will be supported. However, we need to look at the other news concerning the further May’s steps over Brexit. If the agreement with Northern Ireland’s DUP party and the cross-party talks between the Conservative and Labour parties are unsuccessful, it will hurt the British pound. In addition, French President Emmanuel Macron said that the short-term extension would be better, as it would prevent the risk of Eurosceptics during the EU Parliamentary elections next month. 
  • In case of the long-term extension, the GBP will also rise. However, the long-term delay will possibly weaken the GBP in the long-term period.
  • If any disagreements between the EU leaders come out, the British pound will fall.
What are the key levels?

On the daily chart of GBP/USD, the pair has been testing the resistance at the central pivot at 1.3073. If this level is broken, the next resistance is placed at 1.3158. In case of negative news, the GBP will fall to the support at 1.2983, which lies near the 200-day SMA. The next support is placed at 1.2948. If we look at indicators, Parabolic SAR shows the downward movement for the pair.

Similar

USD and GBP Traders Await Big Moves
USD and GBP Traders Await Big Moves

The first week of November promises to be eventful, as we have the Fed meeting, the BOE update, and the NFP release. Read more details here.

Latest news

Market Crash Incoming?
Market Crash Incoming?

This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.

What Currency Will Overperform?
What Currency Will Overperform?

S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.

Deposit with your local payment systems

Feel the Team Spirit

Data collection notice

FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.

Callback

A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Next callback request for this phone number
will be available in

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later

Don’t waste your time – keep track of how NFP affects the US dollar and profit!

Beginner Forex book

Beginner Forex book will guide you through the world of trading.

Beginner Forex book

The most important things to start trading
Enter your e-mail, and we will send you a free Beginner Forex book

Thank you!

We've emailed a special link to your e-mail.
Click the link to confirm your address and get Beginner Forex book for free.

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera