GBP/USD drifting near 1.2600 as Brexit progress grinds to a halt

Brexit progress has stalled, but January will be seeing plenty of stress.
The economic calendar is wearing down ahead of the Christmas holidays, leaving the Cable to spiral out.

Joshua Gibson FXStreet

GBP/USD is trading just north of 1.2600 heading into Tuesday's main trading sessions, but bidding interest in the Sterling looks relatively low, with the Cable rising on broader US Dollar weakness.

UK Prime Minister Theresa May delivered a fresh round of talking points on Brexit before the UK's parliament on Monday, but little new developments were delivered, and PM May also announced that she will be withholding her current Brexit proposal from a parliamentary vote until mid-January; May's camp is making a bleed-the-clock play in hopes that a lack of time to work out an alternative deal will see no-voters support her arrangement, which currently looks set for resounding defeat whenever the House of Commons gets its hands on it. Mrs. May's intentional sabotage of the Brexit timeline has seen the Labour opposition party's leader, Jeremy Corbyn, put forward a motion for a parliamentary no-confidence vote in PM May's government, but that measure will also not be appearing until January, and the Cable is set to grind it out through the Christmas holiday season as investors await plenty of action to come in the new year.

Tuesday sees the economic calendar free of UK data, and the run-up into Wednesday's calendar sees only mid-tier offerings on the docket as well, with Core CPI and Retail Price Indexes due in the mid-week.

GBP/USD levels to watch

Cable is set to continue grinding sideways with little impetus for full-fledged moves with Brexit on hold until January, but as FXStreet's own Valeria Bednarik notes:

Now trading at around 1.2630 the GBP/USD pair stays at risk of falling further. In the 4 hours chart, the price is currently struggling with a 20 SMA that lost its early upward strength, while the 200 EMA in the same chart continues gathering downward momentum far above the current level, now at around 1.2780. Technical indicators lack directional strength around their midlines, with the Momentum still developing below the 100 level, indicating absent buying interest. The pair could gain some ground on a break above 1.2686 the high set last Thursday, yet gains beyond 1.2700 seem unlikely as long as Brexit chaos prevails. The bearish potential will increase short-term on a break below 1.2590, the session low and the immediate support.

Support levels: 1.2590 1.2545 1.2510

Resistance levels: 1.2640 1.2685 1.2720

Author

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

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