(Feb 27 Monday) The British pound fell once again in Europe after a newspaper report said that the U.K. Prime Minister Theresa May's group was preparing plans for another Scotland independence referendum in March. Cable fell from 1.2742 to 1.2390 (-52 pips) in the prior Asian session and fell on extended selling in Europe from 1.2435 to 1.2380 (-55 pips) in the European morning session. (9:30 GMT).
The Financial Times reported that Theresa May might agree to a new Scottish vote, however with a condition that it will be held after the U.K. Brexit. The news however, failed to push the pound lower below 1.2380 to skeptical market participants. Thus shortcovering of the pound ensued, and cable bounced to 1.2438. Despite the pound appearing soft, still remains in a narrow range awaiting the next move from NY.
Scotland held its last independence referendum vote on September 2014 and the vote to remain in the U.K. won 55 percent to 45 percent. The pound was about 1.7000 (July 2014) before the referendum and fell to about 1.5750 (Nov 9 2014) showing the bearish impact of a potential Scottish separation from the U.K.
Today, the U.K. parliament, House of Lords begins their examination of Theresa May's bill to authorize the nation's withdrawal from the European Union. May's ministers warned the Lords not to amend the Brexit bill.
The next market focus will be on U.S. President Trump's initial address to the U.S. Congress tomorrow Tuesday Feb 28th. Trump is expected to present his plans for tax and healthcare reforms and infrastructure spending. Trump reiterated his pledge to repeal and replace the Obamacare law.
The 14 day moving average support lies at 1.2410. The next short-term support lines are: 1.2375, 1.2350.
The short-term resistance levels are: 1.2465 (14 DMA), 1.2550-1.2555 and 1.2610.