GBP/USD analysis: giving back gains at a fast pace

GBP/USD Current price: 1.2592

• Sterling collapse on risk aversion and in spite of solid manufacturing growth in the UK.
• Brexit uncertainty is still the highest risk factor for the Pound.

The Sterling was among the worst performers this Wednesday, losing the 1.2600 mark against its American rival. Despite a solid UK Markit Manufacturing PMI, which came in at 54.2 for December, surpassing the previous reading and beating expectations, the pair collapsed on prevalent risk aversion, coupled with Brexit uncertainty. The pair traded as low as 1.2580, settling around the 1.2600 figure late US session. In the Brexit form, opposition Labour wants its leader, Jeremy Corbyn to back a second Brexit referendum, although PM May's had clearly stated that there won't be another people's vote. Corbyn is reluctant to call for another referendum but rather prefers to call for a general election in the hopes he will replace Mrs. May. The Brexit deal will go into the Parliament for approval later this month. This Thursday, the IHS Markit will publish the UK Construction PMI  foreseen at 52.9 vs. the previous 53.4.

Technically, the pair is at its lowest in over two weeks, bearish short-term, given that, in the 4 hours chart, it's back below its moving averages, with the 200 EMA turning lower at 1.2730 and the 20 SMA doing the same near 1.2680. The Momentum indicator in the mentioned chart heads lower in negative territory and at its lowest in over three weeks, while the RSI is trying to stabilize around 36, all of which keeps the risk leaned to the downside. The pair has given back the ground added in the previous two weeks, reflecting how concerned investors are on Brexit and how willing are to resume selling Pound at the slightest sign against it.

Support levels: 1.2580 1.2540 1.2510

Resistance levels: 1.2610 1.2650 1.2685

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