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GBP/USD recovers 1.2600, PM May's confidence-vote win halts progress

  • May's last-minute no-confidence win sees her holding onto power within her own Tory party, but further roadblocks remain.
  • Brexit progress has ground to a halt, and little else remains but for PM May to offer up her divorce deal on the parliamentary chopping block.
GBP/USD sees itself trading near the 1.2600 key level after seeing a brief relief rally on Wednesday, though gains were capped following Prime Minister Theresa May's confidence vote from within her own Tory party. PM May won the Tory party confidence vote 200-118, winning with a margin of 83, showing that a growing majority of her own government are increasingly dissatisfied with her governance and the direction that Brexit has taken. 

GBP/USD Forecast: May's Phyric could send it far lower - 3 reasons

Despite winning the no-confidence vote of her own Tory party, PM May still remains exposed to a broader, more impactful no-confidence vote within the UK's parliament, and although May's promise to not seek re-election within the Tory party may have won over some hard-line Tory members in Wednesday's closed vote, May's current Brexit proposal still sees little chance of passing in the House of Commons successfully, and EU leaders are increasingly unwilling to give May time for circular divorce negotiations.

Thursday sees a clear economic calendar for the Cable, leaving the Pound to battle refreshed Brexit headlines as Theresa May heads back to square one on her divorce bill, though Continuing US Jobless Claims at 13:30 GMT (forecast 1.65 million, last 1.63 million) could see momentum from the greenback side of things if the figures miss expectations as USD investors are beginning to grow increasingly wary of a potential economic slowdown in the domestic US economy much sooner than previously expected; softening economic data could also see the numbers-sensitive Federal Reserve flaking off of further rate hikes, a scenario that would see the USD slipping further back.

GBP/USD Levels to watch

Wednesday's recovery sees the GBP/USD pairing backing off of 20-month lows, but as FXStreet's own Valeria Bednarik noted, further Brexit doldrums down the road could spark bearish sentiment anew: 

The recovery may continue until market players realize Brexit is a checkmate for the UK. Technically, the pair is trading below its daily high of 1.2671, also below a strong static resistance at 1.2660, the former yearly low that rejected sellers a couple of times in the last few weeks. In the 4 hours chart, the price is currently holding above a still bearish 20 SMA, with the 200 EMA gaining downward traction at around 1.2810. Technical indicators recovered from oversold readings but remain within negative ground, losing upward strength. There's a long way ahead before calling the pair bullish, as the pair would need to firm up above 1.2840, something quite unlikely without a clear Brexit path.

Support levels: 1.2600 1.2555 1.2510

Resistance levels: 1.2665 1.2700 1.2745