The Sterling's bullish push through Monday looks set for a challenge today as Brexit headlines continue to circulate.
With market sentiment firmly pinned to geopolitical forces, economic data could take a backseat to the information narrative this week.
GBP/USD is trading near 1.2760 ahead of Tuesday's London market session, and the beleaguered Pound is struggling to hold onto gains near the 1.2800 handle despite broad-market Greenback weakness spurred by a potentially-dovish Federal Reserve for 2019, with Brexit concerns continuing to plague Sterling bidders as the UK's parliamentary vote on Prime Minister Theresa May's much-maligned EU withdrawal agreement looms ahead on January 14th.
PM May is pulling all of the stops to try and force her Brexit divorce bill through the UK's House of Commons, pulling the bill from a parliamentary vote in December in order to run the clock on Brexit in an effort to leave nay voters too little time to scrape together alternative plans should her bill fail. Despite the government's arm-twisting, the House of Commons still looks set to reject May's opus, leaving the GBP exposed to market flows fearing a hard, no-deal Brexit.
UK leaders were seen discussing the potential of extending Article 50, a move that would effectively postpone the final Brexit date of March 29th in a bid to provide some cushion for the UK should May's deal fail, but Mrs. May's office was quick to deadpan the reporting, with a contradictory statement within hours of the initial reporting in a bid to remove a Brexit stall option from the table.
Tuesday's economic calendar is decidedly low-tier for the Cable today, with only Halifax Housing Prices on the docket at 08:30 GMT, with the quarterly figure expected to improve from 0.3% to 0.4%, and the US offering looks similarly thin with a smattering of low-impact datapoints, though the US Trade Balance for November at 13:30 GMT (forecast -$54 billion, last -$55.5 billion) could see added emphasis amidst US-China trade negotiations today and tomorrow, while API Crude Stocks into January 4th later on at 21:30 GMT could see a fresh round of bidding in energies if US barrel reserves continue to decline.
GBP/USD Levels to watch
Despite the Cable's intraday turndown heading into Tuesday, the pair looks to be developing a near-term bullish technical outlook, with FXStreet's own Valeria Bednarik noting that, "according to the 4 hours chart, finding support in a flat 200 EMA, currently at 1.2720, while the 20 SMA turned barely up below it. The Momentum indicator in the mentioned chart barely eases from overbought readings while the RSI indicator keeps heading north, currently at around 65. A relevant resistance comes at 1.2814, the high set on the last trading day of 2018, with a spike higher expected on a break above it, but most likely, to be short-lived."
Support levels: 1.2730 1.2695 1.2655
Resistance levels: 1.2780 1.2815 1.2850