GBP/USD opened the new trading week with a bearish gap near 1.2700 handle before seeing a mild recovery through the mid-Asian trading window erasing losses from the gap down opening. The price action of British Pound seems to be pinned at 1.2750 level as UK markets remain cautious in the run-up to the House of Commons vote on Prime Minister Theresa May’s latest Withdrawal Proposal, which is expected to face defeat at the hands of parliament.
The vote on EU approved Brexit deal is to be by British Parliament tomorrow and the current scenario indicates that deal is likely to be voted down as Labor, the Liberal Democrats, the DUP, the SNP and dozens of Conservative MP’s remain solid on their stance against the deal which could lead to a general election leaving the UK in a messy no-deal Brexit scenario.
GBP Could Slide Sharply On Increasing Brexit Woes
Meanwhile, news from UK Times newspaper that 48 letters required to trigger a no-confidence vote on PM May’s government have finally been sent, also increased market fears and weighed on British Pound. However broad-based US Greenback’s weakness helped the pair limit downside move despite bearish influence surrounding GBP. As of writing this article, GBPUSD pair is trading near flat at 1.2748 up by 0.35% on the day.
On the release front, UK’s calendar is highly active for the day as London market hours will see the release of Q3 GDP, Industrial Production, Manufacturing Production and trade balance data with forecasts hinting at positive GDP data and dovish outcome for industrial and manufacturing production data. Bearish data will influence cable into a highly volatile price action as investors remain twitchy ahead of tomorrow’s Brexit vote.
Meanwhile, US market hours remain relatively silent aside from JOLTs Job Opening data. When looking from a technical perspective, the overall outlook for British Pound continues to remain firmly bearish. The daily chart shows that it broke the daily descendant trend line coming from November high through lateralization, invalidating the relevance of the break.
In the same chart, a bearish 20 SMA has rejected advances while technical indicators resumed their declines within negative ground, keeping the risk skewed to the downside. According to the 4 hours chart, the pair offers a neutral-to-bearish stance, as it closed a few pips below a flat 20 SMA, as technical indicators maintain downward slopes below their midlines. Expected support and resistance for the pair are at 1.2695, 1.2660, 1.2620 and 1.2775, 1.2805, 1.2840 respectively.