GBP/USD: keeps sliding below key 23.6% Fibo into Thanksgiving as nerves mount up over Brexit uncertainties

GBP/USD has been on the backfoot, recovering only at times of dollar weakness, whereby Brexit remains a critical matter at hand which, but each day that goes by, appears to be sending the UK crashing out of the EU without a deal. 

Ireland’s Prime Minister Leo Varadkar has recent;y signalled temporary arrangements might be needed to avoid chaos should the U.K. crash out of the European Union without a deal, according to a recent Bloomberg article. "Northern Ireland’s status is a key sticking point in Brexit talks, with the focus on avoiding border checkpoints returning once the U.K. exits the bloc" - Bloomberg reminded readers. 

However, looking beyond that, If UK PM May’s Brexit deal failed to get through the UK parliament in early December, then we are going to see immense pressure on her to call a referendum and ask the electorate to choose between a ‘no deal’ Brexit or to stay in the EU. 

However, if May loses her job over a vote of no confidence, (for it is impossible to see her in situ if parliament failed to endorse her deal), then we are likely to see the pound plummet. Sterling comes under due to the uncertainties, and there will be nothing more uncertain than what a Brexiteer-steered hard-deal would look like for the UK economy and the Kindom's political stability.  The people's confidence of the nation in politics is already in tatters. However, so far, May is still in power, (Who would want to pick up the batton at this stage anyway?), and she remains adamant that the UK will leave the EU. At this stage, it looks like she will keep her job take her plan to Parliament before Christmas and therefore the vulnerable pound can find some solace on that. 

What now? We wait. 

We now move into the Thanksgiving holidays so liquidity is going to be thin, and while price action can be unpredictable, it is unlikely that we are going to see anything for the rest of this week to upset the current ranges and if anything, some profit taking could be on the cards in the greenback, especially given the recent shift in tone from various Fed officials, including Powell, regarding the Fed's path of tightening. However, markets could be subject to various sound bites from May's current trip to Brussels this week where she is meeting EU officials as the two sides scramble to finalise a Brexit deal in time for Sunday's summit of European leaders. However, it might be next week where we get the full load down on events. The BBC reported that European Commission Vice-President Valdis Dombrovskis said "sherpas" - officials tasked with doing the detailed work ahead of summits - were due to meet on Friday to work on the final texts of the withdrawal agreement and the future relationship.

GBP/USD levels

Cable has been thrown back underwater and into the 1.27 handle again, eroding technically bullish indicators on the long and short-term charts with bears eyeing the August and October lows at 1.2705/1.2662. Below 1.2662 would trigger further weakness to the 61.8% Fibonacci retracement of the 2016-2018 advance and the June 2017 low at 1.2593/89. There is indecisiveness in the price action at this juncture seen on the long wicks of the latest monthly candlesticks, although the bulls are under pressure while below the 23.6% retracement of 19 Sep highs and 29th Oct lows at 1.2839 - A Key upside target in the near term that guards the confluence of the 38.2% Fibo and 2nd Oct double bottom lows at 1.2920ish.