- Brexit is back at the forefront once again, with PM May digging in her heels and rejecting the ECJ's float of withdrawing Article 50.
- A lack of bidding power underneath the Sterling is keeping the major pairing at bay near five-week lows at the 1.2700 key barrier.
The GBP/USD pairing is off of recent highs once again as Brexit-based volatility is fueling steady drops into new lows, and rising investor fears about a hard Brexit and the upcoming parliamentary vote are keeping the Pound underbid as broader markets seek safe shelter amidst growing fears about a global economic slowdown.
Tuesday saw the Cable set in heavy whipping action, bolstered into near-term highs near 1.2840 after the European Central Justice announced that the UK is essentially free to withdraw Article 50 at anytime, a move that would effectively kill Brexit, but the ECJ's comments were met shortly thereafter by a staunch Prime Minister Theresa May, who sent a spokesperson to announce that the UK would not be quitting Brexit under any circumstances, throwing the Sterling back onto the floor, punching into a new 18-month low at 1.2658 before recovering into 1.2700, a level that GBP/USD is now struggling with in Wednesday's early action.
The economic calendar is a fairly light screening for the GBP, with November's final Markit Services PMI due at 09:30 GMT and forecast to clock in at 52.5, a mild uptick from the previous month's 52.2, while the US market session will be seeing restrained trading volumes with American institutions shuttered in observance of the passing of former President George H.W. Bush.
GBP/USD levels to watch
As noted by FXStreet's own Valeria Bednarik, GBP/USD has maintained steady downside momentum despite plenty of volatility and see-saw action across the charts: "the pair has been extremely volatile, but nothing changed the negative tone, as the early advance was contained by selling interest around the daily descendant trend line coming from 1.3174, November monthly high. In the shorter term, and according to the 4 hours chart, the pair is now developing below a mild-bearish 20 SMA, while technical indicators remain within negative ground, lacking directional strength at the time being, a result of the latest 70 pips' bounce. Another attempt to break below 1.2660 may result in a test of the 1.2588 level, June 2017 monthly low."
Support levels: 1.2690 1.2660 1.2620
Resistance levels: 1.2760 1.2800 1.2840