GBP/USD starting out on back foot ahead of meaningful vote, 1.2600 eyed

GBP/USD starting out the week on the back foot ahead of key Brexit vote.
Labour, the Liberal Democrats, the DUP, the SNP and dozens of Conservative MPs cannot support the deal.

Ross J Burland FXStreet

GBP/USD ended New York on Friday at 1.2728 down 0.41% within Friday's range of between 1.2790- 1.2709 and has started the Asian day on the backfoot following continuous negative Brexit headlines. The US payrolls growth cooled in November, with only 155k jobs placed in the month, below expectations at 198k. At the same time, jobs growth in the prior two months was revised down -12k and average hourly earnings grew less than expected (0.2% vs consensus 0.3%). However, on the flipside, the annual growth rate for earnings held up at +3.1%, while unemployment held near 40-year lows of 3.7%.

Brexit uncertainties, UK Times reported letters sent in to trigger PM May's leadership challenge

Markets sold the dollar noting that the momentum has been dissipating into year’s end. However, Brexit remains a weight ahead of the 'meaningful vote this week on the 11th. Should May fail to win over the Commons in parliament, it could lead to a general election and there was a "very real risk of no Brexit" with Labour, the Liberal Democrats, the DUP, the SNP and dozens of Conservative MPs saying they cannot support the deal. If the deal is rejected, markets fear that there will be no simple solution. Mrs May told the Mail on Sunday it would mean "grave uncertainty for the nation with a very real risk of no Brexit or leaving the European Union with no deal" - The UK Times reported that the required 48 letters have been (finally) sent in to trigger PM May's leadership challenge.

GBP/USD levels

Analysts at Commerzbank have noted that GBP/USD is bouncing off the bottom of its 4 month trading range. "It will find initial resistance at the 1.2840 current December high. While capped by the resistance line at 1.2994 it will remain offered. Support at 1.2662, the August low, has been tested and held 3 times now. 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. Above 1.3002 lies the November 14 high at 1.3072. Further resistance comes in at the 1.3175 November high below which we will retain a longer term bearish bias."

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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