19.03.201914:39 Forex Analysis & Reviews: GBP / USD: Speaker of the House of Commons complicates the Brexit puzzle

The UK market data turned out to be quite good: almost all the indicators came out in the "green zone", ahead of the forecast values. Summed up only an indicator of the increase in the number of applications for unemployment benefits - instead of the expected growth to 13 thousand, the indicator went out at around 27 thousand. But this fact remained in the shadows against the background of a decrease in the level of unemployment to a record-low value of 3.9%, as well as against the background of a rise in the level of wages to 3.4%. Such a result speaks of the strengthening of the British labor market and maintains hopes for the restoration of inflation indicators. By the way, tomorrow, March 20, a key indicator of inflation will be published - the consumer price index. According to preliminary forecasts, the index will show a positive trend - both on an annualized basis and on a monthly basis.

Despite the importance of the published releases, traders demonstrate a very "formal" reaction to them. The pound is fully focused on the prospects of Brexit, especially since the rapid news flow changes the mood of the market almost every hour. As is known, the speaker of the House of Commons on the eve said that he removes from the agenda the question of another vote (the third in a row) for the draft transaction. According to him, a second vote is possible only if "significant changes" are made to the proposed agreement. At the same time, he referred to the 400-year-old convention, which prohibits returning the proposal (in the same form) to the House of Commons, which was already rejected by deputies. Thus, the Brexit puzzle has again become complicated - now, in addition to agreeing on a deal with deputies, Theresa May has to somehow overcome the legal barrier and put the bill to a vote.

According to the British press, the prime minister will meet with members of the government to agree on further steps this afternoon. Hypothetically, parliamentarians can circumvent the above convention by voting for the corresponding amendment. But such a scenario is possible only with the support of the majority of deputies who would be interested in "revitalizing" the project in a legislative context. If May does not receive support from the deputies, this idea will, in any case, be doomed to failure - after all, this will indicate that the deal will not be approved again, even if the project falls into the session hall of the House of Commons.

In other words, everything goes to the fact that the Brexit negotiation process will be delayed again - this time for a longer period. In the context of today's events, it is not so important whether the draft deal will be put to the vote or not. Theresa May herself was ready to remove this issue from the agenda unless she enlists the support of the majority. Therefore, the resulting legal conflict will allow the market to quickly understand whether the transaction has a chance for approval or not.

This explains the reaction of the British currency to current events. It seems that the market has already come to terms with the idea that Brexit is unlikely to take place this year. The fact is that, besides all the other nuances, there is one very important factor - the elections to the European Parliament. According to the document of the legal service of the European Union, which was distributed among the 27 ambassadors of the EU, the initial extension of the terms of Brexit is possible until July 1, that is, before the meeting of the new convocation of the European Parliament (July 18). If the British parliament is not able to vote for the agreement (which is very likely), then Britain will have to take part in the elections of the European Parliament, delegating its representatives. Therefore, in this case, the stage of the negotiation process may be delayed until the end of the current year, and according to some data, up to 2022.

However, there is information of a different nature. According to rumors, the European Union can give Theresa May a few more days so that she can coordinate the deal with the deputies and circumvent the above legal barriers. Let me remind you that at the end of this week (on Thursday and Friday), the EU will hold a summit, which was originally planned to consider the question of postponing Brexit. But Brussels still retains hope for the British Parliament's approval of the deal. Therefore, the Alliance can begin the procedure for granting a delay a little later - approximately 10 days after the summit.

Thus, the situation with Brexit is still in limbo: May tries to circumvent the 400-year convention, while simultaneously coordinating the draft deal with the Conservatives and the DUP. And Brussels, in turn, is willing to delay the decision to postpone. All this is happening against the background of the upcoming elections to the European Parliament, in which many representatives of British politicians do not want to participate. It is worth noting that among all the most likely scenarios, there is no "hard" Brexit. This fact provides background support for the pound, allowing GBP / USD buyers to count on retesting the 33rd figure. The closest resistance level is the mark of 1.3370 - this is the upper line of the Bollinger Bands indicator on the daily chart. The support level is the mark of 1.3175: at this price point, the Tenkan-Sen line and the middle line of the Bollinger Bands indicator intersect on the same timeframe.