GBP/USD Forecast: Sterling glued to 1.2700 the day before UK parliament votes on Brexit deal

• The GBP/USD is stuck to 1.2700 area one day before the UK parliament is expected to vote on the Brexit agreement.
• UK Environment Minister Gove confirmed that the UK government wants to leave the European Union on March 29.
• The European Court of Justice (ECJ) announced its decision on the Article 50 case and ruled that the UK can unilaterally revoke Brexit notification of its intention to withdraw from the EU.
• The UK manufacturing output fell -0.9% m/m in October while the UK monthly GDP rose 0.1% m/m in October with data having little effect on Sterling. 

The GBP/USD opened with the gap on the downside at 1.2700 on Monday after closing the previous week at 1.2715. Sterling opened lowe at 1.2700 but managed to rise towards 1.2760 after the ruling of the European Court of Justice (ECJ) said the UK government can unilaterally revoke Article 50. The news saw Sterling supported only temporarily and the currency pair re-approached 1.2710 minutes after the ruling was made public as the key risk event remains the UK parliamentary vote on Brexit deal tomorrow, December 11.

Set of the UK macro data including manufacturing output falling -0.9% over the month in October and the monthly UK GDP rising 0.1% m/m in October had little effect on GBP/USD as Brexit deal approval remain key risk factor. 

The UK Prime Minister is likely to face a defeat as there was no shift in the balance of opinions of lawmakers during the Brexit deal debate. Falling short of the vote in parliament, Theresa May is likely to face Conservative party leadership challenge, a vote of no-confidence in her government, or even a second referendum, so the weekend discussions with the EU President Donald Tusk and Irish Prime Minister Leo Varadkar indicate her strategy of re-negotiating the deal once it is not approved.

The GBP/USD is stuck to a downward sloping trend on a 1-hour chart and needs to break to above 1.2800 to build a potential higher. The technical oscillators including Momentum and the Relative Strength Index are both in the neutral territory while Slow Stochastics made a bearish crossover and it is pointing lower. The Brexit uncertainty continues to weigh on GBP/USD with 1.2658 new 2018 low made last week remaining a short-term target on the downside. On the upside, the GBP/USD needs to confirm the break above 1.2800 to reverse the downtrend.