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Jignesh Davda
GBP/USD

Johnson Challenged in Court yet Again

British Prime Minister Boris Johnson is being called out for something most will agree is quite peculiar. The PM has repeatedly said he refuses to request an extension to the October 31 deadline if it comes to that. It’s unclear why he has stuck to this stance despite a recently passed law that forces him to request such an extension if he is unable to reach a deal by the EU summit.

Well, he may not have a choice in the matter as legal action has been taken to effectively force him to do so. Scottish National Party MP Joanna Cherry has taken the matter to court in hopes of coming up with a resolution. The legal case calls for a court-appointed official to sign extension papers if it comes to that. Further, it accompanies fines and potential jail time for the PM for refusing to request an extension.

Johnson has faced a series of defeats in his attempts to deliver an EU exit for the United Kingdom. This week, his new Brexit plan was met with quite a bit of opposition from EU officials, signaling little progress in reaching a deal with the clock continuing to run down.

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Technical Analysis

GBP/USD has made a bit of a recovery in the second half of the week, leading to a technical development.

GBPUSD Daily Chart

The pair has held above major support at 1.2287 on a daily close basis. Further, it broke higher from a downtrend channel that has encompassed price action from the September 20 high.

At the same time, the 20-day moving average and a horizontal resistance level at 1.2373 has blocked the upside.

GBPUSD 4-Hour Chart

The pair trades in the middle of two important technical areas ahead of the US jobs report that typically accompanies an increase in volatility. We might see a technical break after the report which stands to clarify the near-term directional bias for the pair.

Bottom Line

  • GBP/USD trades in the middle of important support and resistance confluences.
  • A break below 1.2287 would reinforce the downtrend.
  • It will take a sustained break above 1.2373 to signal more upside for the pair.
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