GBP/USD Forecast: At the double-bottom before Brexit becomes binary

GBP/USD is hardly holding onto 1.3000, hitting the same levels it tackled twice already. all eyes are on the third Brexit vote, which is not exactly a third Meaningful Vote. 

It is staging a minimal bounce on the slightly better than expected final GDP figure for Q4 2018: 1.4% YoY against 1.3% initially reported. The meager quarterly growth of 0.2% was left unchanged. 

The focus shifts quickly back to Brexit.

After House of Commons Speaker John Bercow ruled out a repeat vote on the full Brexit agreement, the government decided to only bring the Withdrawal Agreement (WA) to Parliament. The WA is legally-binding, and the other part, the Political Declaration (PD) is non-binding. The EU does not seem to object this, perhaps because they know the chances are slim.

Despite offering to resign after the deal is approved, embattled PM Theresa May has yet to convince a small group of hardline or "Spartan" MPs to get behind the deal. Moreover, the Northern Irish DUP remains opposed to the agreement. Fresh rumors suggest they may change their minds in the last minute, but these were denied. 

May may count on the support of some Labour MPs from Leave constituencies that support the Brexit deal. The leadership of the party is trying to whip everybody to reject the agreement. Shadow Brexit Secretary Keir Starmer said that the upcoming departure of May means they should not vote for something uncertain.

The vote is due around 14:30 GMT, and it will surely be closer. In the unlikely case the deal finally passes, GBP/USD could rally on the surprising outcome, even though further hurdles are due later on. It will mean that the UK will leave the EU on May 22nd. 

What happens if the deal is rejected again?

In the more likely case of a third rejection, there are two very different outcomes, and today we will not know how things play out 

The first is a hard Brexit on April 12th, and this remains the default option. In this case, the pound is set to crash.

The second is a long-extension of between nine months to a year, that means the UK will participate in the elections to the European Parliament. A lot depends on the second round of indicative votes that will be held on Monday. MPs were unable to vote in favor of an option on Wednesday, but are working hard to find a solution that would command a majority in additional non-binding votes.

Elsewhere, markets are slightly more upbeat amid somewhat more optimistic reports from the US-Chinese trade talks, the playing down of the yield curve inversion from Fed officials, and some end-of-quarter flows.

GBP/USD Technical Analysis

Cable is approaching the 1.3005 level where it had bounced twice in during March, a double bottom and a significant support line. Break or bounce? This is a critical question. 

Losing the line opens the door to 1.2960, another double-bottom and the lowest point in March. Further down, 1.2895 was a support line in February and 1.2830 capped GBP/USD when it traded on lower ground. 

1.3080 was a swing high earlier in the day and a swing low also earlier in the month. 1.3140 was a support line twice as well, while 1.3230 held the pair down several times. 1.3270 was the peak of the week.

More: GBP/USD has more room to the downside ahead of the Brexit WA vote — Confluence Detector