Tuesday evening, March 28, the Scottish parliament has voted by 69 to 59, in favour of holding a second independence referendum. GBP/USD has slumped more than 220 points since Tuesday, from a psychological level at 1.2600, to 1.2376, breaking the support level at 1.2500. The bulls are currently attempting to recover the significant support level at 1.2400.
Scottish First Minister, Nicola Sturgeon and her SNP Party won the first round of the battle, helped by the support from the Green party. The proposal will be delivered to the UK parliament for voting. However, UK Prime Minister Theresa May has stated not long ago that the UK government will not approve the referendum during the 2-year Brexit negotiation process with the EU.
UK Prime Minister Theresa May, will trigger Article 50 of the Lisbon treaty today, March 29, starting the 2-year Brexit negotiation process with the EU. Theresa May will formally notify the EU Council President, Donald Tusk. Tusk is expected to present draft Brexit guidelines to the European Union’s 27 member states, within 48 hours of the UK triggering Article 50. The member states are expected to hold a Brexit summit on April 29.
Brexit process uncertainties and a second Scottish referendum turmoil pose downward pressure on GBP and GBP crosses. The UK’s economic prospects are still vague.
Although Trump’s healthcare bill failure hit USD and US equities on Monday, US consumer confidence for March, released on Tuesday, soared to its highest level since 2000. The figure cushioned USD and pushed US equities up from a 6-week low. From the perspective of economic data, the US economy remains solid at present. US Q4 GDP final reading will be released this Friday March 31, with better-than-expected readings likely providing further support to USD.
It will take an extended period to see the concrete impacts caused by Trump’s administration on the US economy, after more actions are put on the table, although it doesn’t seem to be optimistic.
Today US pending home sales (Feb), will be released at 15:00 BST. It will be followed by the US EIA crude oil inventory at 15:30 BST. Oil prices have rebounded since March 27, helped by OPEC’s 6-month output extension consideration.