GBP/USD analysis: no Brexit progress foreseen until late January
|GBP/USD Current price: 1.2627
- UK PM May spoke before the Parliament but failed to provide fresh hopes.
- Labour leader, Jeremy Corbyn, to put forward a no-confidence motion on May.
The Sterling benefited from a weaker dollar, with the pair rising up to 1.2646, retreating, however, from the level, following PM May speech in the Parliament. Hopes of some clarity regarding Brexit were diluted after May repeated that the current deal is the only deal and that it will probably be submitted to a parliamentary vote in the third week of January. He also reiterated that EU leaders don't want to use the backstop and that they want to reassurance it. Opposition Labour Party's leader, Jeremy Corbyn, has said that he has decided to put forward a motion of no-confidence in PM May following her decision not to hold the Brexit vote immediately. Nevertheless, with the Christmas Holiday around the corner seems unlikely any new development will take place at least until the second week of January, therefore limiting chances of a firmer Pound beyond those resulting from dollar's weakness. The market will be anyway looking to sell the pair at higher levels. The UK has only released the Rightmove House Price Index for December, which increased by 0.7% YoY. There are no data scheduled in the kingdom for this Tuesday.
Now trading at around 1.2630 the GBP/USD pair stays at risk of falling further. In the 4 hours chart, the price is currently struggling with a 20 SMA that lost its early upward strength, while the 200 EMA in the same chart continues gathering downward momentum far above the current level, now at around 1.2780. Technical indicators lack directional strength around their midlines, with the Momentum still developing below the 100 level, indicating absent buying interest. The pair could gain some ground on a break above 1.2686 the high set last Thursday, yet gains beyond 1.2700 seem unlikely as long as Brexit chaos prevails. The bearish potential will increase short-term on a break below 1.2590, the session low and the immediate support.
Support levels: 1.2590 1.2545 1.2510
Resistance levels: 1.2640 1.2685 1.2720
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