The Beginning of The End for Brexit?

Prime Minister Boris Johnson won a big victory at yesterday’s general elections with an estimated 360 seats versus the 326 needed for a majority. As result British Pound traded broadly higher, with six out of the seven GBP pairs rallying over 2% in just of a minutes. GBP/JPY was the biggest gainer of course, also because weaker yen, due to talk of a phase 1 trade deal between US and China on the horizon.

Intraday bias in GBP/JPY remains neutral and the consolidation from 143.67 could extend. Deeper retreat cannot be ruled out (specially in event if the US tariffs go into effect this weekend). Also the RSI indicator is in its overbought area on the daily chart, as you can see. But we expect the downside pressure should be contained well above 139.32 support to bring rise resumption.

On the upside, a clear break of 143.67 on daily basis will resume the rally from 126.67. Sustained break of the resistance trend line (now also at 143.67) will pave the way to 148.87 key level next. Above it is the psychological area 150.00.

Regarding EUR/GBP, the pair is trading stable around $0.83 now. Looking ahead, it is quite clear Johnson will be able to pass the withdrawal agreement in Parliament and if that happen we expect EUR/GBP to slide towards even 0.8150.