EURGBP traders may need to get ready for some action as there will be a UK election on December 12, following the passage of the 3rd election bill at the House of Commons this evening.
In a vote of 438-20 in favour of the December 12 election, this vote superseded the failed amendment sponsored by Labour Party leader Jeremy Corbyn to have the election on the 9th of December. This decision now paves the way for the bill to be sent to the House of Lords tomorrow.
How Will This Impact the EURGBP and Other GBP Pairs?
The GBP pairs have had a muted response to the news. GBPUSD may not have any impact at all as the cloud of the Fed rate decision tomorrow hangs overhead. The Bank of Canada is also poised to make a rate decision, which also excludes the GBPCAD from being a possible pair to trade.
This leaves the EURGBP and the GBPJPY, with the EURGBP being the preferred pair as the single currency continues to suffer a hangover from September’s quantitative easing program. If the election is able to break the Brexit impasse, then this is likely to lead to a drop in the EURGBP. The exact point at which such a position could be assumed still has to be decided as the impact may not be immediate.
The EURGBP holds steady at 0.86361 amidst a bearish pennant formation on the daily chart. Immediate support is seen at 0.8466 (red line) and 0.8273 (green line). These are the primary targets of a breakdown of price from the bearish pennant.
A break of the pennant’s upper border could indicate temporary reprieve for the pair, but may only be an opportunity to sell a rally going forward.