Real Brexit Negotiation Will Start after UK Election
President of European Commission Jean-Claude Juncker had some “real talks” with UK Prime Minister Theresa May after the latter announced to call for a snap election in June. And Juncker's spokesman Margaritis Schinas said that Juncker considers that “the real political negotiations on article 50 with the United Kingdom will start after the elections foreseen for the 8th of June.” Meanwhile, the EC sees UK election as a “domestic issue” and “will not intervene”. European Council President Donald Tusk's spokesman said that “the UK elections do not change our EU27 plans.” And, “we expect to have the Brexit guidelines adopted by the European Council on 29 April and following that the Brexit negotiating directives ready on 22 May. This will allow the EU27 to start negotiations.”
May surprised the world by making a U-turn to announce that she will seek parliamentary approval to bring forward the election scheduled for May 2020 to June 8 this year. She explained that “because Brexit isn't just about the letter that says we want to leave, it's about negotiating the deal, about getting the right deal from Europe.” And, “the public want us to deliver on leaving the European Union and they want us to build that stronger Britain for the future beyond leaving the European Union.” It's generally expected that May will get over two-third of support from the parliament for the snap election.
GBP/USD daily Outlook
Intraday bias in GBP/USD remains on the upside for the moment. There is no sign of topping yet. Firm break of 100% projection of 1.2108 to 1.2614 from 1.2365 at 1.2871 will target 161.8% retracement at 1.3184. Still, price actions from 1.1946 are seen as a correction. Hence we'd expect strong resistance below 1.3444 to bring larger down trend resumption. on the downside, break of 1.2614 resistance turned support will turn bias back to the downside for 1.2365 support first.
In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term reversal yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.
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