GBP/USD continues to trade sideways yesterday reaching daily peaks in the 1.2800 neighborhood before sinking back down into the 1.2700 region, though swing lows continue further into the downside. Meanwhile this week’s low of 1.2658 has tested the waters of a 19-month low for the Sterling as the run-up to December 11th’s Brexit vote continues to see the GBP/USD pair off-balance amid fear of a potentially disastrous outcome. According to the UK’s Telegraph, the current stacking of MPs in the UK’s House of Commons is currently set at 216 for and 423 against Prime Minister Theresa May’s current Brexit proposal, and despite several days of debates in the parliament ahead of December 11th’s MP vote on whether or not to accept the PM’s current deal, the odds remain stacked heavily against PM May and her shrinking constituency.
Economic data in the UK continues to disappoint as Brexit fear continues to take its toll
While yesterday’s up move was unaffected by USD’s demand from hawkish FOMC member comments and dovish UK macro data, A sudden spike in global risk-aversion, triggered by the US President Donald Trump’s latest comments on China trade, turned out to be one of the key factors that underpinned the greenback’s relative safe-haven status which dragged the pair below mid 1.27 price handle. Adding to this, growing concerns of investors over global economic slowdown and consecutive session of bearish rout in all key equity markets across the globe killed risk appetite in market considerably boosting demand for safe haven USD. The only thing keeping the Cable afloat in the broader markets is broader USD weakness owing to an inversion of the short end of the US Treasury yield curve hinting at recession in US markets. As of writing this article, GBPUSD pair is trading at 1.2712 down by 0.17% on the day.
On release front, there isn’t any major market-moving economic data due for release from the UK, while the US economic docket highlights the release of the ADP report and ISM non-manufacturing PMI. With investors focus glued to the latest developments surrounding the UK’s looming departure from the EU, today’s US macroeconomic data seems unlikely to be a major game changer, though might assist traders to grab some short-term opportunities later during the early North-American session. When looking from technical perspective, the pair’s repeated failed attempts to find acceptance above 200-hour EMA clearly points to persistent selling bias at higher levels. The downside, however, remains cushioned ahead of the next big event risk and hence, the pair seems more likely to continue with its volatile swings within a broader trading range. Expected support and resistance for the day are at 1.2695, 1.2660 and 1.2760, 1.2800 respectively.
This article was originally posted on FX Empire
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