GBP/USD continues to trade sideways, reaching daily peaks in the 1.2800 neighborhood before sinking back down into the 1.2700 region, though swing lows continue to plumb further into the downside, and this week’s low of 1.2658 has tested the waters of a 19-month low for the Sterling as the run-up to December 11th’s Brexit vote continues to see the GBP/USD pairing off-balance and traders fearful of a potentially disastrous outcome.
According to the UK’s Telegraph, the current stacking of MPs in the UK’s House of Commons is currently set at 216 for and 423 against Prime Minister Theresa May’s current Brexit proposal, and despite several days of debates in the parliament ahead of December 11th’s MP vote on whether or not to accept the PM’s current deal, the odds remain stacked heavily against PM May and her shrinking constituency. Sources have begun warning that PM May may be forced to delay the parliamentary vote, opting to pull the bill in a last-ditch effort to scrape together even more negotiating time.
A well-placed source said: “It’s in the Government’s hands to decide when to have the vote and I know of at least three cabinet ministers who have been urging her to pull it altogether. They have effectively told her – the deal isn’t going to fly until the backstop comes out.“Labour has said it is calling a vote of no confidence the day after, if she loses the vote, and if the DUP is still offside then she’ll lose that too. The only way to pull the DUP back in will be to scrap the backstop.” – The UK Telegraph
UK data remains soft, with Wednesday’s Markit Services PMI sagging to a 28-month low of 50.4, reversing market expectations of 52.5 and dropping away from the previous reading of 52.2. Thursday remains clear of any GBP-related data, and the GBP/USD pairing remains trapped in tense markets ahead of the December 11th cut-off.
GBP/USD Levels to watch
The only thing keeping the Cable afloat in the broader markets is broader USD weakness, but hopes for a bullish break are looking slim, according to FXStreet’s own Valeria Bednarik: “the pair peaked for the day at 1.2797 on broad dollar’s weakness, retreating once again from the daily descendant trend line coming from November high at 1.3174. There’s a long-term resistance at 1.2880, the 61.8% retracement of the 2016/18 rally, and the market will perceive the pair as bullish only on a break above it. In the meantime, the short-term picture is neutral as the pair is a few pips above a mild-bearish 20 SMA, while the Momentum indicator aims modestly higher around its mid-line while the RSI indicator heads nowhere around 50.”
Support levels: 1.2730 1.2695 1.2660
Resistance levels: 1.2760 1.2800 1.2840