GBP/USD remains constrained below 1.2800 as Brexit angst begins to ramp up
GBP/USD has managed to recover to familiar levels near 1.2770, following the broader market upwards in early Monday action as recovering risk appetite sees the greenback drastically underbid, but with the G20 Leader's Summit already in the rearview mirror, Brexit concerns have returned to the fold afresh, keeping the Sterling pinned as investors continue bracing for the upcoming parliamentary vote on Prime Minister Theresa May's Brexit proposal in the House of Commons on December 11th.
UK's May faces no-confidence vote if Parliament rejects Brexit deal - Bloomberg
Things are looking bleak for PM May and her current Brexit proposal, which got accept unanimously at a Brexit Summit by the European Union only a few weeks ago, but now faces a stiff showdown in the UK's own parliament, where it's looking like PM May lacks the support needed on the homefront to get her UK-EU deal through the gauntlet, and a failed vote on the current divorce bill will not only see the UK headed for a hard, no-deal Brexit, but will also see May facing down a hostile no-confidence vote within her own parliament. The House of Commons will begin to debate the current Brexit deal this week in the run-up to December 11th's final vote, and the EU has been explicit in their reminders that it's this deal or no deal.
It's Markit PMI day on the economic calendar, with the UK's Manufacturing PMI on the docket for 09:30 GMT (forecast 51.5, previous 51.1), while the US side will also be seeing ISM Manufacturing PMIs at 15:00 GMT (forecast 57.8, last 57.7).
GBP/USD Levels to watch
Brexit-bearish Sterling remains firmly planted on the mats, according to FXStreet's own Valeria Bednarik: "the GBP/USD pair is trading not far away from its yearly low of 1.2661 set last August, with gains above 1.2800 being limited below 1.2880, the 61.8% retracement of the 2016/18 rally, indicating a long-term dominant bearish trend. Also, the pair is developing below a daily descendant trend line coming from November high at 1.3174, coming at around 1.2830/40 this Monday. Technical readings in the daily chart maintain the risk skewed to the downside, as the pair is developing far below moving averages, while the RSI indicator resumed its decline, now gaining downward traction at around 42. In the 4 hours chart, the 20 SMA heads mildly lower around 1.2770, providing an immediate short-term resistance, while technical indicators head lower within negative levels. The risk of a downward extension will increase on a break below 1.2724, November 27th daily low."
Support levels: 1.2725 1.2690 1.2665
Resistance levels: 1.2770 1.2805 1.2840