GBP/USD 'danger zone' below 50-DMA; Time almost up to slowdown Brexit

Currently, GBP/USD is trading at 1.2382, down -0.63% or (77)-pips on the day, having posted a daily high at 1.2487 and low at 1.2346.

The British pound vs. American dollar struggled over the last 4-months to held gains above the 1.2680 level. Once again, the debacle initiated as soon as prices touched 1.2700, market participants soon stopped dreaming with a run towards 1.2780 and higher. Evidently, the BoE timing intervention via a dovish outlook of future interest rates hikes was the catalysts bears awaited to erase more than 350-pips in profits that the pair had accumulated.

Today's UK economic docket has one more report for pound traders as RICS Housing Price Balance survey is expected to print 22.0% which is 2.0% lower from previous. However, 'a better than expected' figure may translate as proof of a robust housing sector which has the potential to slow down further sterling losses in the near term. 

Historical data available for traders and investors indicates during the lasts 6-weeks that GBP/USD pair had the best trading day at +3.01% (Jan.17) or 373-pips, and the worst at -1.19% (Jan.18) or (146)-pips.

May's Brexit not 100% there

Rowena Mason, Deputy political editor at The Guardian, notes, "Dozens of amendments have been tabled by Labour and opposition MPs in the hope of getting enough cross-party support to secure better parliamentary scrutiny of Brexit, the rights of EU nationals living in the UK, access to the single market and a more meaningful vote at the end of the two-year negotiations."

BoE's Forbes: If economy stays solid and inflation pick-up continues, this could soon suggest a rate hike

Mason further writes, "Some Conservatives have indicated they could be willing to back amendment 110 tabled by Chris Leslie, the former shadow chancellor, calling for “any new deal or treaty” with the EU to be put to a vote before both houses of parliament. This would give MPs the opportunity to reject any exit terms they felt unsatisfactory.

Technical levels to watch

In terms of technical levels, upside barriers are aligned at 1.2497 (high Feb.6), then at 1.2590 (high Jan.30) and above that at 1.2705 (Feb.2). While supports are aligned at 1.2250 (low Jan.20), later at 1.2106 (low Jan.10) and below that at 1.1985 (low Jan.16). On the other hand, Stochastic Oscillator (5,3,3) seems to head south in the first stage towards the oversold territory. Therefore, there is evidence to expect further US dollar gains in the medium term.

On the long term view, if 1.1985 (low Jan.16) is in fact, a short-term bottom, the upside runs all the way towards 1.4617 (short-term 50.0% Fib). However, without removing the 'hard' dark cloud from Brexit negotiations, the sterling faces gargantuan resistances against 1.3240 (short-term 23.6% Fib), later at 1.4000 (short-term 38.2% Fib) and later at 1.4160 (long-term 23.6% Fib).

Political market moves more interesting than boring old data