The British pound survived another shock and almost fell below yesterday's lows after news broke that a process was launched today leading to a vote of no confidence in British Prime Minister Theresa May.
This news received real confirmation. Tonight, members of the Conservative Party of Great Britain are expected to discuss whether Theresa May can continue supporting her or send her out. As it became known, 48 representatives of her party sent letters of no confidence to a special committee chaired by Graham Brady. It was he who confirmed the information about the upcoming voting.
The importance of the problem lies in the fact that if the majority of parliamentarians from the Conservative Party vote against May, it will be necessary to choose a new leader, which will take at least a couple of weeks, if not more, which the UK doesn't have.
On the other hand, if May gets support, and most analysts agree on this, her leadership will not be able to be challenged for one year, which will strengthen her position and allow Brexit to look at it without thinking.
Immediately after the above news appeared, the British Prime Minister made a statement. According to May, she will with all her strength resist the vote of no confidence, even despite the fact that in the negotiations on the guarantee of the absence of a rigid border in Ireland, there is progress that is needed to conclude a Brexit deal. Theresa May also noticed that a change of leader creates uncertainty at a time when she is least needed, which will undermine the Brexit process.
And indeed, if May leaves his post, it remains to be seen who will be the new leader and how he will negotiate on Brexit, the deadline for which is March 29, 2019.
As for the technical picture of the GBP / USD pair, surprisingly, after the release of the above news, the pound tried to break below support at 1.2480, but the bears did not succeed. The confidence that May will remain at her post forces traders to consider long positions on the pound, and any solution to the problem with the Irish border will give a powerful impetus to the purchases of the British pound. Fixation above the resistance of 1.2540 is a good signal for bulls, putting on the restoration of the trading tool. However, the upward trend may be limited by large resistance levels of 1.2580 and 1.2630.
The data, which came out in the eurozone in the first half of the day, supported the European currency, although this did not affect the overall situation in the pair.
According to the report, industrial production in the eurozone increased in October this year after a major decline in September amid a slowdown in economic growth. Thus, industrial production grew by 0.2% in October, after falling by 0.6% in September. Compared to the same period of 2017, production increased by 1.2%. Economists had expected that industrial production in the eurozone in October would grow by 0.3% and 0.8%, respectively.
As for the technical picture of the EUR / USD pair, it remained unchanged. It is likely that pressure on the euro will continue. The breakthrough of intermediate support in the area of 1.1320 will lead to a new wave of short positions with access to the lows of last month in the area of 1.1290 and 1.1265. An upward correction will be limited to the levels of 1.1350 and 1.1370.
The material has been provided by InstaForex Company - www.instaforex.com