GBP/USD Up Marginally Ahead of UK Parliament Vote on NI Protocol

The GBP/USD is slightly higher this Monday as traders seek to continue the push to the upside based on risky sentiment bets. The pair is up 0.18%, adding to Friday’s 0.11% gain in a week that is relatively light on market-moving news for the cable. 

The primary fundamental triggers for this week’s price action will come from the speech of the Bank of England’s Governor Andrew Bailey. He is due to speak as a policy panellist at the ECB Forum on Central Banking holding in Portugal. This event comes up on Wednesday. 

A more immediate trigger for GBP/USD price action comes from the UK Parliament, where lawmakers are expected to vote on a bill that will allow the UK government to override the Northern Ireland Brexit deal. This protocol was one of the knottier issues that required extensive negotiations before the Brexit Agreement was signed.

The UK is now seeking powers to change the protocol to allow for more effortless movement of hoods from Great Britain to Northern Ireland. However, there has been opposition to the latest attempt at scuttling this protocol, with the EU saying it was a breach of international law. Foreign Secretary Liz Truss and the EU’s ambassador to the UK, Joao Vale de Almeida, have also voiced their opposition to the move, with de Almeida calling it a “road to nowhere” on a Sky News Sunday program.

GBP/USD Outlook

The price action is attempting a break of the 1.22755 resistance (9 May low, 16 May high, 24 June low). A successful breakout gives the bulls access to the 1.24167 resistance (28 April low and 16 June high) as the first target. A clearance of this new resistance brings the psychological price mark of 1.26000 into the fray. This level also serves as the previous highs of 24 May and 7 June 2022. 1.26546 (30 May high) and 1.28576 are the additional northbound targets above this level.

On the other hand, failure to sustain the breakout move above 1.22755 could allow for a pullback below this price mark. This will bring in recent lows of 22/23 June at 1.21673 into the picture as the next target to the south. Below this support, an additional pivot comes in at 1.19991, the site of the 15 June low.

GBP/USD: 4-hour Chart