Sterling is without a doubt a star today. The triggering of the no-confidence of vote on UK PM Theresa May turns out to be a blessing for her, as well as the pound. More and more MPs turn out to support May as the ballot at 1800-2000 GMT approaches. And we tend to agree with Environment Secretary Michael Gove that May would win the leadership challenge “handsomely”. That will give her a strong position to go to EU summit tomorrow, to get the “assurances” she need to push the Brexit agreement through the Commons. We’ll see how it goes in a few hours, but things are looking positive.
For now, GBP/NZD is the biggest mover today, a loser this time, as NZD’s rebound also lost steam. It turns out that 61.8% retracement of 1.6684 to 2.0469 at 1.8130 is a rather tough support level to beat, opposite to what we’ve expected here. It’s a bit early to declare, but considering that daily MACD is turning up, fall from 2.0469 should have at least made a short term bottom at 1.8125.
We’d now expect stronger rebound to 1.8634. Firm break there will confirm this case and bring further rise to 38.2% retracement of 2.0469 to 1.8125 at 1.9020. Reaction from 1.9020 will reveal how deep the fall from 2.0469 would develop into.
