Brexit: Why did the pound soar? The first debate on the Brexit agreement began in the British Parliament

The debates and discussions that began in the British Parliament today on the Brexit issue, support the British pound, which sharply strengthened its position against the US dollar today in the morning. Weak data on the service sector was ignored by traders, although on a typical day such a sharp drop in the region of 50 points would have led to a massive sale of the British pound against a number of world currencies.

Today began the discussion in Parliament agreed by the government agreement on withdrawal from the EU. The discussion will last five days, and on December 11, there will be a final vote on this issue. It is possible that any news or insider will lead to a surge in volatility of the pound to either side.

As I noted above, the PMI Purchasing Managers Index for the UK services sector, which is quite important for the economy, dropped to 50.4 points this November, indicating a slowdown in economic growth at the end of this year.

In Markit said that the main reason for the decline was a sharp drop in the growth rate of new orders and the deterioration of expectations for the year ahead. The composite PMI index of Great Britain in November of this year fell to 51.0 points. Let me remind you that the index value below 50 points indicates a slowdown in activity. Considering that all the attention of traders is now focused on the Brexit debates, it is quite possible that the current report will simply be played in the future.


In Markit also noticed that the current survey results for supply managers in the UK in November of this year may lead to the fact that the country's GDP in the 4th quarter will grow by only 0.1%.

As for the technical picture of the GBP / USD currency pair, it makes little sense to make any predictions about short-term movements. Large resistance levels are seen around 1.2815 and 1.2870, while support is located at 1.2680 and 1.2570.

The European currency has slightly risen against the US dollar, but it's difficult to talk about further maintaining the uptrend.

The report on the field of servants did not lead to significant changes in the market.

According to the data, the PMI Purchasing Managers Index for the services sector of Italy rose to 50.3 in November of this year, returning above 50 points, while in October it is at the level of 49.2 points. Economists had expected the index to remain unchanged.

The PMI Purchasing Managers Index for the services sector of France in November, on the contrary, dropped to 55.1 points from 55.3 points in October of this year. Economists had forecast the index at 55.0 points.

In Germany, a similar service sector fell to 53.3 points against 54.7 points in October of this year. Economists had expected the PMI for Germany in November to be 53.3 points.

As for the eurozone, the purchasing managers' index for the services sector also slightly declined in November and amounted to 53.4 points against 53.7 points in October of this year. Economists had expected the index to decline to 53.1 points.

The technical picture in the EUR / USD currency pair remained unchanged. Only a breakthrough of a large support level in the area of 1.1310 can lead to a larger sale of the European currency with a rise to the lows of last month in the area of 1.1270. In the case of an upward correction, provided that the pair fails to break below 1.1310, the upward potential will be limited by resistances of 1.1380 and 1.1410.

The material has been provided by InstaForex Company -