Growth of Sterling may continue

Investors are still watching the situation around Brexit with great attention. The day before a vote in the British Parliament, it was decided not to leave the EU without a deal, which strongly supported the pound sterling rate.

As expected, the British parliamentarians voted to solve the problem of the country's withdrawal from the European Union only through the conclusion of an agreement that affects a number of economic and political problems, including the dispute over the border with Northern Ireland. Today, there will also be a vote on the postponement of the Brexit problem for two months, which can also become the basis for the next local growth of the British currency.

What can lead the decision to delay the Brexit? In our opinion, if for more than two years the Cabinet Minister, Theresa May, did not manage to advance in this matter from a favorable point of view for Britain, can the two-month delay completely close this question? We doubt it. Europeans are going to meet the British but somehow not too optimistic for the latter, where in fact, it delayed the resolution of this issue in time. As we can see, the ruling circles in London, realizing that the EU is unlikely to allow them to decide. With this problem, the first wants the decision to postpone can smoothly proceed to the subsequent desire to hold a new Brexit referendum on which the desire of opponents to exit the country and stay in the EU.

It can be assumed that this scenario can be implemented, and then we should expect continued growth of the sterling exchange rate to levels since its decline that started after the 2016 referendum. As for the probable dynamics of the pound today, according to the results of voting in parliament where a decision on deferment will be made with a high probability, she may again be supported as has already been indicated above.

Forecast of the day:

The GBP/USD pair remains in the range of 1.2960-1.3115. If a decision is made to postpone Brexit, the pair may break the mark of 1.3315 and rush to 1.3400. At the same time, if this does not happen or the market decides that this delay does not bring anything positive to the British side in negotiations with the EU, the pair may fall to 1.3100 and further below the level of 1.3230.

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The USD/CAD pair trades below 1.3315 in the wake of rising crude oil prices and the weakness of the US dollar. If the rise in oil prices continues and the pair holds below the level of 1.3315, there is a chance that its decline will continue to 1.3230.

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The material has been provided by InstaForex Company - www.instaforex.com