It is projected that the Prime Minister's deal will be rejected. The release of news regarding the vote will more than likely create extreme volatility in both the GBP/USD and EUR/GBP, as well as the GBP/JPY currencies.
The daily GBP/USD chart shows that price is testing an area of potential resistance and is currently forming a bearish candlestick pattern. If the pattern holds, then the GBP/USD is likely to go down to at least test the 1.2650 area and possibly even the 1.2350 area. Additionally, some analysts have predicted that if a deal was not reached, then the GBP/USD could see the 1.2000 area this year.Currently, the EUR/GBP formed a doji yesterday and today's bar is bearish at the moment. A test of .8840 may occur and, if that area holds, then a test of .9100 could occur.
Although big moves are expected, here's the issue - with big moves come big losses unless you are trading either the binary options, call spreads or the new touch brackets. The touch brackets are very similar to trading a mini Forex account. There is a floor price and a ceiling price. If going short, then the ceiling will limit risk and the floor will limit profit. If going long, then the floor limits risk and the ceiling limits profits. If either price is touched (floor or ceiling) then you are out of the trade.
For example, here are the touch brackets available this morning:
If a trader has a bias to the long side, then he could buy the GBP/USD 1.2812 - 1.3062 at 1.2853 entry price for a risk of $41 and a maximum profit of 209.00. If price touches 1.2812 then the trader loses $41. If price touches 1.3062 then the trader makes a profit of $209 (excluding exchange fees).
If the trader has a bias to the downside, then he could sell the GBP/USD 1.2662 - 1.2912 touch bracket. If the entry price is at 1.2844, then he has a total risk of $68 with a maximum profit of $182.00. If price reaches up and touches 1.2912 then the trader loses $68. If price reaches down and touches 1.2662, then the trader makes $182 in profit (excluding exchange fees).
Of course, the trader also has the option of exiting at any time or holding until expiration if price does not touch the floor or ceiling price.