Sterling was injected with another dose of volatility on Tuesday evening after British MP’s rejected a timetable for Boris Johnson’s Brexit deal by 322 to 308.
It followed the House of Commons passing a vote allowing the prime minister's Withdrawal Agreement Bill to proceed to the next stage. The government losing this key vote on the Brexit timetable will make it incredibly difficult for Johnson to fulfil his “do or die” pledge to remove Britain out of the European Union on October 31st. With more delays, drama and uncertainty expected as the Brexit deadline looms, the path of least resistance for Sterling points south. This negative sentiment is already being reflected in the GBPUSD which is trading around 1.2870 as of writing. Until proper clarity and direction are provided on Brexit, the GBPUSD is poised to test 1.2800 and 1.2700, respectively.
Looking at the technical picture, Sterling bulls are losing some steam on the daily charts with 1.3000 acting as a strong resistance level. Sustained weakness below 1.3000 should encourage a decline back towards 1.2800. Although the GBPUSD is building momentum on the weekly charts, this could be reversed if bears can secure a weekly close below 1.2700.
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