GBP/USD once again trading near 1.2850 ahead of UK CPI, BoE’s Carney

• Sterling takes the long way around on Brexit, trades near where it started.
• Wednesday brings a much-needed break from Brexit headlines, delivering meaningful data and a BoE appearance.

GBP/USD finds itself heading into Wednesday little-changed from Tuesday’s opening prices, trading near 1.2850 ahead of the London market for the mid-week. With Prime Minister Theresa May’s Brexit withdrawal agreement defeated in the UK’s parliament, traders are looking towards what will come next in the slow-moving exit process: the UK’s main opposition leader Jeremy Corbyn has called for a parliamentary no-confidence vote in Theresa May’s government, but the measure is unlikely to succeed with the majority of the House of Commons not interested in handing over control of the country to Corbyn, instead wishing to see Brexit finally resolved.

Odds are rising of an extension of Article 50, pushing out the final Brexit day, which means odds of a hard Brexit are declining, helping to prop up the Sterling once again. The Cable plunged to 1.2670 in the run-up to the parliamentary vote, surging shortly thereafter to 1.2890 as PM May’s divorce bill faced a landslide defeat. With the long-awaited parliamentary vote finally out of the way, traders will be looking towards an appearance from the Bank of England’s Mark Carney at 09:15 GMT today, closely followed by annualized Retail Sales for December (forecast 2.9%, last 3.2%), December annualized PPI Core Output (forecast 2.4%, last same), and most notable CPI for December, with the y/y headline figure expected to slip from 2.3% to 2.1%.

GBP/USD Levels to watch

Though the Cable survived a major Brexit vote (albeit by trading sharply in both directions), uncertainty isn’t limited to just this week, with plenty of Brexit action to follow in the coming weeks, and technical readings are skewed towards the middle as noted by FXStreet’s own Valeria Bednarik:

The GBP/USD pair now trades in the 1.2860 region, and the 4 hours chart shows that, despite the intraday slump, chances of a bearish move are limited, as technical indicators are currently bouncing from around their midlines, while the pair is settling above its 20 SMA and 200 EMA. Wide ranges and high volatility is not over, as the fact is that, after all the noise, uncertainty remains the same. The pair could keep rallying should the recovery extend beyond 1.2900, now the immediate resistance.

Support levels:  1.2830 1.2805 1.2765
Resistance levels: 1.2900 1.2930 1.2960