GBP/USD Forecast: Boris Johnson's premiership and uptrend support in danger

"This court has already concluded that the prime minister’s advice to Her Majesty was unlawful, void and of no effect" – That ruling of Lady Brenda Hale and 10 other justices in the UK Supreme Court has shocked the political system.

MPs are returning to the House of Commons and so is embattled prime minister Boris Johnson – that was forced to cut short his trip to the UN General Assembly. 

GBP/USD initially advanced on the news that parliament will potentially be able to lock out the option of a no-deal Brexit. However, the high level of uncertainty is now weighing on the pound. Opposition leader Jeremy Corbyn – which also made schedule changes amid Labour's annual conference – is set to table a vote of no-confidence. However, the timing of such a motion – and the outcome of such a move – are up in the air.

Corbyn would like to replace Johnson at 10 Downing Street and he will likely be supported by the Scottish National Party. However, seeing the hard-left leader as PM is unpalatable to large parts of the "rebel alliance" and to markets – weighing on the pound. Other candidates for caretaker PM are Labour's Margarett Beckett and the Conservative Kenneth Clarke. Even if Johnson is not replaced, the opposition would like to secure an extension to Brexit before calling elections.

Developments in parliament – which include long debates and a statement from PM Johnson – will likely set the tone.

Johnson is not the only leader facing calls to step down. US President Donald Trump is facing an official impeachment inquiry into his alleged request for Ukraine to dig up dirt against his potential rival in the 2020's presidential elections – Joe Biden. While the chances of ousting the president are low, political uncertainty and the distraction weighs on markets.

Trump has lambasted China for its practices – also dampening the mood. Talks between the world's largest economies continue ahead of a planned break due to China's holiday week. 

Overall, the focus is on events in parliament. With the PM and the leader of the opposition unsure what to do, volatility may increase.

GBP/USD Technical Analysis

GBP/USD is trading along an uptrend support line that accompanies it since early September. Will it break or bounce? Other indicators are mixed. It is trading above the 100 and 200 Simple Moving Averages, but it has recently dropped below the 50 SMA. Momentum has turned to the downside while the Relative Strength Index (RSI) is stable.

Support awaits at 1.2415, which is this week's low. It is followed by 1.2390, which has separated ranges earlier this month and is a critical support line. Lower, 1.2355 capped GBP/USD in early September and 1.2310 worked as support around the same time.

Resistance awaits at 1.2505, which is the weekly high. It is followed by 1.2525, that has held GBP/USD on its way up last week. 1.2580 is the cycle high seen late last week.