UK Prime Minister Boris Johnson is facing yet another defeat as Scotland’s highest court of appeal has ruled against the decision to suspend parliament.
The government will appeal the decision and Johnson expects parliament will remain suspended until a verdict is reached on the appeal.
Johnson has been accused of proroguing parliament to prevent interference with his plans to deliver an EU exit with the threat of a no-deal Brexit. A law has since passed that effectively prevents a no-deal scenario at the October 31 deadline.
Recent events have led to the markets expecting lower probabilities of a no-deal Brexit, causing a relief rally inGBP/USD. The rally has turned into a consolidation as a technical resistance level has held several rally attempts since the start of the week.
Market participants will shift their focus from Brexit developments to European monetary policy as the ECB is scheduled to meet today. The meeting tends to set the tone for the dollar, and as a result,GBP/USDis likely to see a bit of an impact.
A range has formed in GBP/USD after several failed attempts at 1.2373 resistance. Near-term price action is trending lower, although the pair largely remains within a range.
Important support at 1.2300 is likely to hold buyers. This area triggered a reversal in the recovery that took place for most of August. The 50-day moving average is slightly below the horizontal level to create a bit of a confluence.
I expect GBP/USD might remain in a range until there are further developments on Brexit. So far, there have been a lot of political developments inside the United Kingdom, but actual progress towards reaching a deal has been minimal.
The risk tends to remain to the upside, considering the earlier fears of a no-deal scenario. However, there remains a lot of uncertainty about what Johnson will do next. GBP/USD can just as easily top out here if the PM makes progress after a series of defeats.
Upside resistance has blocked rallies in the first half of the week and a range is playing out.
The ECB meets today and often sets the tone for the dollar.
Support for the pair at 1.2300 stands to cap near-term declines.