GBP/USD analysis: Pound subdued to Brexit woes

Valeria Bednarik FXStreet

GBP/USD Current price: 1.2725

Parliament debate on PM May's plan starts this Tuesday, volatility expected in Pound's crosses.
Economic expansion subdued in the kingdom according to Markit.

The GBP/USD pair traded between 1.2698 and 1.2824, quite a range when compared to other majors. Broad dollar's weakness at the beginning of the day was behind the early advance, while Brexit uncertainty was the reason for the intraday decline. Market players are doubting MPs would approve UK PM May's deal, set to be discussed in the House of Commons starting this Tuesday. Their verdict will be out next December 11, anticipating some volatile sessions ahead for GBP/USD. PM May said that she is confident she'll still have a job after the crucial vote, dismissing weekend talks of a no-confidence vote, should the Parliament reject the deal. In the data front, the UK Markit Manufacturing PMI printed 53.1 in November, surpassing estimates of 51.8 and the previous 51.1, but the figure failed to boost the Pound as, according to the official report, the performance of the sector remained comparatively lackluster, barely bouncing from an over two-year low.

The pair bounced with dollar's weakness in the American afternoon to turn neutral daily basis, now hovering around 1.2740. The early rally was rejected by sellers around a daily descendant trend line coming from November high at 1.3174 and settled below a mild-bearish 20 SMA in its 4 hours chart, also far below the 200 EMA. Technical indicators in the mentioned chart have managed to bounce from their daily lows but remained below their daily highs and below their mid-lines. As commented on previous updates, the upside seems well limited as it would take at least a recovery above 1.2880, the 61.8% retracement of the 2016/18 rally to take some pressure of the Pound.

Support levels: 1.2725 1.2690 1.2665

Resistance levels: 1.2770 1.2805 1.2840

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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