GBP/USD Forecast: Losing support after a rejection at resistance as MPs reject everything

GBP/USD is trading below 1.3150, at the bottom end of the recent range: 1.3140-1.3265. While markets find it hard to assess how Brexit will end, the mood is getting gloomier.

There were two significant developments on Wednesday and both do not bode well for a solution.

The UK Parliament voted on eight alternative Brexit options in non-binding indicative votes and rejected all of them. A softer version of Brexit with deeper economic ties was voted down by the closest margin. The option for a second referendum got the highest number of votes. Many MPs abstained. Parliament will likely have another go on Monday.

The second development is that PM Theresa May told her backbenchers at the Conservative Party's 1922 Committee that she will resign once she seals Brexit. Some of her colleagues want to see a different approach in the next stage of talks about the future relationship and some seek to replace her. Boris Johnson, David Davis, and others have swiftly switched to supporting her accord.

However, it may not be enough. There are some 25 hardliners among the ranks of the pro-Brexi European Research Group (ERG) that prefer a no-deal exit over anything else. And no less importantly, the Northern Irish DUP remains against the accord. Party leader Arlene Foster said that abstention was never an option. 

The government aspires to bring the Brexit agreement to a vote on Friday, holding a third Meaningful Vote (MV3). Apart from the apparent lack of a majority, it is unclear how the vote could come about. House Speaker John Bercow repeated his stance that only a motion that includes a substantial change could be voted upon.

Parliament was able to approve the statutory change needed to push back the Brexit date to April 12th, following the decisions taken at the EU Summit. That leaves 15 days to find a way forward.

Elsewhere, global stocks continue sliding alongside bond yields on fears of a recession. The mood helps the safe-haven Japanese yen and US dollar.

GBP/USD Technical Analysis

GBP/USD lost the 1.3140 level that held it earlier and marked the bottom of a choppy range. It is now holding above the 200 Simple Moving Average on the four-hour chart. Momentum is developing to the downside and the Relative Strength Index is beginning to lean lower. All in all, the technical picture is worsening.

If cable loses the 200 SMA, the next support line is at 1.3080 which was a swing low last week. More importantly, 1.3005 was a double bottom during March and it is followed by 1.2960, the trough of this month. 1.2895 is next.

Resistance awaits at 1.3225 that capped the pair early in the week and then by 1.3265 that was a high point earlier in the week. A move above this level on Wednesday did not go too far and proved to be a false break. GBP/USD was rejected at this level.