GBP/USD rising slowly towards 1.2700, but Brexit remains a roadblock

GBP/USD is continuing to drift higher, tapping into 1.2670 in early Wednesday action thanks to a softening US Dollar, but broader market sentiment remains prone to risk shocks as investors fear a global growth slowdown, and Brexit continues to hang over the Sterling as an ever-present reminder that January is likely to unwind any gains seen in the interim.

Wednesday brings a healthy smattering of UK data in the early London window, though most of the data readings land firmly in the mid-tier or lower categories; 09:30 GMT sees UK m/m Retail Price Index (forecast 0.1%, last 0.1%), m/m Producer Price Index - Output (forecast -0.1%, last 0.3%), and November's Consumer Price Index (forecast 0.2%, last 0.1%), all dropping simultaneously, but Sterling markets are likely to remain constrained as traders feel the pressure of continued Brexit headlines.

Brexit angst is set to idle through the Christmas holidays, but UK Prime Minister Theresa May will be seeing a hefty January to kick off 2019. May's Brexit proposal will finally be brought to heel on a parliamentary vote after May's camp pulled the divorce arrangement from an initial vote when they realized they didn't stand a chance of winning, and PM May's camp is looking to wind down the clock on Brexit, giving 'nay' voters no time to angle for an alternative plan should May's much-despised withdrawal proposal fail in the House of Commons. Mrs. May's bull-nosed strategy saw the last straw break for the opposition Labor party, with Labor leader Jeremy Corbyn calling for a parliamentary no-vote in Theresa May's government, which is also set to go down in January.

GBP/USD Levels to watch

Despite several days of slow and steady lift for the Cable, the pair remains heavily bearish with plenty of resistance marked in, as noted by FXStreet's own Valeria Bednarik: 

the short-term picture shows that the positive momentum is limited, as the pair is barely holding above a flat 20 SMA and still well below a bearish 200 EMA, while technical indicators are advancing within positive ground with uneven strength. Bigger time frames maintain the risk skewed to the downside, as in the daily chart, selling interest aligned around a bearish 20 DMA rejected the intraday advance. As mentioned on a previous update, seems unlikely that the pair could sustain gains beyond the 1.2700 figure, although the Fed could clearly change the picture. Bears will get back the grip on a break below 1.2590.

Support levels: 1.2590 1.2545 1.2500
Resistance levels: 1.2685 1.2720  1.2750