The leaders of the European Union’s 27 member states on Sunday approved the agreement on the UK’s exit, European Council (EC) President Donald Tusk announced via his Twitter profile.
The EU leaders also expressed their support for “a close relationship with London” after Brexit will be finalized next year.
The withdrawal agreement – a 585-page document – details the legal conditions for the UK’s withdrawal from the EU on March 29, 2019. In addition, a 26-page political declaration touching upon the future relationship between the UK and the EU has been signed by the leaders. The representatives of the European states unanimously endorsed the exit treaty, which revolves around citizens’ rights, the Irish border problem, and the £39 billion divorce bill.
The agreement is yet to be approved by the British Parliament. However, as of today, most Members of Parliament are likely to vote against it, so Prime Minister Theresa May has to work towards convincing the Parliament to give the document the green light next month.
On November 22, the GBPUSD pair closed about 0.8% higher on positive sentiment ahead of the summit. However, on Friday, the pound lost most of these gains after Spain and the UK failed to reach an agreement on Gibraltar under the new Brexit agreement. GBPUSD closed the week at 1.280.
The British pound traded moderately higher on Monday morning, as the discussions during the summit pointed to a win-win situation for both the EU and the UK. The UK and Spain reached an agreement over Gibraltar on Saturday, settling the difficult issue outside the Brexit negotiations.
From a technical analysis viewpoint, GBPUSD is expected to continue on a sideways or a slightly bullish trend on the 4-hour chart. This is because the 9-period moving average recently crossed the slower MA from bottom to top while the Stochastic indicator is indicating an oversold level.
However, don’t be surprised if the bullish trend slowly retreats. The British Parliament will submit the document to a vote in early December, and its approval is not guaranteed, as many MPs have expressed publicly that they are determined to vote against it.
Some members of the British Parliament do not agree with the current Brexit conditions, hinting that Theresa May has accepted too many concessions that favor the European Union. However, EU leaders have warned that a better deal won’t come. As an example, European Commission President Jean-Claude Juncker has already called for the UK House of Commons – the UK Parliament’s lower house – to vote in favor of the document and conduct the Brexit process as agreed with the EU.
“This is the deal, it’s the best deal possible and the EU will not change its fundamental position when it comes to this issue, so I do think the British parliament – because this is a wise parliament – will ratify this deal,” Juncker said, according to The Guardian.
Thus, the longer-term trend of the GBPUSD pair depends on the British Parliament’s decision. If the Brexit deal is not approved, the pair will likely enter into a new bearish trend, targeting the 1.270 support level as a first test. Exness traders are now waiting for the results to be released and will likely place trades within the first hour to catch the volatility. If you’d like a piece of that action, open an Exness account now and stand at the ready for what promises to be the biggest price break of the year.
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