GBP/USD edges lower toward 1.27 as UK government loses key vote on budget legislation

• British government suffers another Brexit defeat in Parliament.
• US Dollar Index remains on track to close the day higher.
• PM May's spokesman confirms that it's not government policy to extend Article 50.

The GBP/USD pair came under a renewed selling pressure in the last hour after British government lost the vote, 303 vs 296, on the amendment to change the budget legislation to limit ministers' tax-raising powers in a no-deal scenario. As of writing, the pair was losing 0.6% on the day at 1.2710.

Earlier today, British Prime Minister Theresa May's spokesman said that the finance bill amendment was not desirable but its effect would be an inconvenience rather than anything more significant. Commenting on the latest talks regarding a possible extension to Article 50, "PM reaffirmed at the cabinet that it is not government policy to extend Article 50," the spokesman said.

On the other hand, with European currencies losing demand on Tuesday, the greenback gathered strength and recovered a large part of yesterday's losses to keep the pair under pressure. As markets are waiting for the FOMC to release its December meeting minutes on Wednesday, the US Dollar Index is adding 0.25% on a daily basis at 95.90. Today's data from the U.S. showed that the NFIB Business Optimism Index retreated to 104.4 in December from 104.8 in November, but was largely ignored by the participants.

Technical levels to consider