GBP/USD Forecast: Ready to rally? Opposition may be getting its act together

• UK opposition parties are convening for a critical meeting to try to stop a hard Brexit. 
• The government continues preparing for leaving the EU by October 31st.
• Tuesday's technical chart is pointing to further rises.

Can the opposition stop a no-deal Brexit? That is the question traders are asking themselves today – and signs of cautious optimism are already pushing the pound higher. 

Labour Leader Jeremy Corbyn previously wanted to halt a no-deal Brexit by a vote of no-confidence (VONC) – a move that some other opposition parties reject. On Tuesday, Jo Swinson, leader of the pro-Remain Liberal Democrats, warned that Corbyn's insistence a VONC might fail as not enough MPs would support his bid to become prime minister. Rebel MPs from the ruling Conservative Party may find to stomach placing the hard-left leader in Downing Street. 

But now, Corbyn may have had a change of heart. 

According to the Guardian, the opposition leader may now support a pre-Brexit election to thwart a no-deal exit from the EU. Moreover, senior Labour MP and shadow Brexit secretary Keir Starmer has said that legislation is needed to halt a hard Brexit. 

Labour's seeming willingness to compromise may facilitate an agreement that may find a majority in parliament when it reconvenes next week. Markets see a no-deal Brexit as an economic disaster, Sterling has lost ground since Boris Johnson became PM after pledging to leave by the October 31 deadline "do or die." 

Johnson has reiterated his commitment to exit the bloc within the 65 days remaining until Brexit Day and told MPs that "You don't get to decide whether Brexit happens." Moreover, reports suggest that he sought legal advice on how to close parliament in order to push through his plans. The chances of reaching a compromise with the EU on the Irish backstop remain slim as Johnson said the chances depend only on the EU. The blame game is alive and kicking also in Brussels after European Commission President Donald Tusk hinted that the blame for a hard Brexit would be on the UK PM.

The chances of a US-Sino trade deal have also been diminishing. China has cast doubt about Trump's optimism and denied that high-levels talked took place over the weekend. US bond yields are dropping and weighing on the US dollar, reversing Monday's trend. And also here, the clock is ticking – the US is set to slap China with new duties on September 1st – and the world's second-largest economy pledged to retaliate.

Overall, GBP/USD will likely move on developments around Brexit and also on the trade war.

GBP/USD Technical Analysis

GBP/USD is trading within an uptrend channel since jumping late last week. GBP/USD also enjoys upside momentum and holds above the 50 and 100 Simple Moving Averages. It is capped only by the 200 SMA. All in all, the picture is bullish.

Resistance awaits at 1.2295, which is August's high. Next, we find the mid-July low of 1.2380, followed by the late August support line of 1.2420. Higher above, 1.2520 capped cable twice in late July.

Support awaits at 1.2200, which was a support line on Friday. It is followed by 1.2110 that was a stepping stone on the way up last week. 1.2065 was last week's low, and 1.2015 is the 2019 trough.