- The Brexit mood remains sour for investors, keeping the GBP/USD underbid.
- Two key reports that give insight into the UK economy's ability to survive a hard Brexit are due today, and will be drawing attention.
GBP/USD traders see their major pair struggling near 1.2740 after Tuesday's trading saw the Cable slip from the 1.2800 handle as Brexit concerns rolled over into the next chapter with little fanfare after last weekend's EU Brexit summit came to a quiet, but successful close.
The current Brexit agreement was unanimously supported by the European Union last weekend, and despite the quiet victory for UK Prime Minister Theresa May, the broader market's Brexit fears remain unassuaged, and GBP traders already have their attention pinned to the upcoming House of Commons vote on the current Brexit offer, slated for December 11th. Investors are increasingly anxious in the run-up to the UK's parliamentary vote, and market participants across the spectrum are concerned that PM May lacks the support within her own parliament to get the current Brexit deal across the finish line with hardcore Brexiteers within her own Tory party vowing to vote down the proposal, a move that would see the UK heading straight into a no-deal, hard-Brexit.
On the UK's economic docket for Wednesday is the results of the Bank of England's (BoE) Bank Stress Tests, a key test of the UK's ability to survive a messy Brexit scenario, while the BoE will also be dropping their Financial Stability Report, expected sometime in the early hours, and traders will be keeping an eye out for the unscheduled reports as they will be providing key evidence regarding the GBP's ability to weather a hard divorce from the EU.
GBP/USD Levels to watch
With Brexit tension holding steady over the Cable, bearish action remains high on the list for the GBP/USD, as noted by FXStreet's own Valeria Bednarik: "the pair remained under pressure after breaking below the 1.2800 figure, spending the last session near the mentioned low as selling interest rejecting attempts to recover ground around 1.2780. The mentioned November low stands now as a key psychological support, with a break below it exposing the yearly low at 1.2661. In the middle is October low at 1.2690. The short-term technical picture is bearish as in the 4 hours chart, the pair extended its decline below a mild-bearish 20 SMA, also developing some 300 pips below a bearish 200 EMA, as technical indicators resumed their declines within negative ground, maintaining negative slopes ahead of the Asian opening."
Support levels: 1.2720 1.2690 1.2660
Resistance levels: 1.2670 1.2815 1.2850