GBP/USD Forecast: Sterling Set Re-test 2018 Low As Pressure Mounts Ahead Of Brexit Vote

• The GBP/USD reversed an initial gain and it is treading down at a 1-month low of 1.2710 after the UK Labor party said it will initiate no-confidence vote if Brexit deal fails to pass the parliamentary vote on December 11.
• The US and China signed a temporary trade war truce agreement promoting a Risk-on mood with the US Dollar retreating lower but Brexit news took over later on Monday.
• The UK manufacturing PMI rose unexpectedly strongly to 53.1 in November, up from 51.1 in the previous month but had no market impact.
• The UK parliament is expected to vote on Prime Minister Theresa May’s Brexit deal on December 11 with the debate starting on December 5.

The GBP/USD is trading on the downside at around 1.2710 after the UK Labor party stepped up the pressure on the UK Prime Minister Theresa May and said it will initiate a no-confidence vote on her position if the Brexit deal vote in the UK parliament fails to pass. Over the weekend the G-20 summit saw the US President Trump making a temporary 90-day trade war truce with China’s President Xi Jinping. The trade war agreement supported the Risk-on sentiment with global stock rallying and the US Dollar broadly retreating lower. 

The GBP/USD was unable to hold onto daily gains and fell from the Monday high of  1.2825 to 1.2708 level as political pressure on May increased, disregarding improving fundamentals.  All eyes are now on the UK parliament voting on Brexit deal on December 11 with the parliamentary debate starting on December 5.

Meanwhile, the UK manufacturing PMI improved in November to 53.1 from the October reading of 51.1. The UK manufacturing PMI data had no market impact on Sterling. 

With the first important Brexit headline coming into play, the GBP/USD reversed lower towards 1.2700 level forecast in my morning GBP/USD Forecast. 

Technically the GBP/USD is moving in a downward sloping trend on the hourly chart. After sliding lower earlier on Monday, the technical oscillators including Momentum and the Relative Strength Index are both pointing sideways in the neutral territory. The Slow Stochastics fell from the overbought territory after making a bearish crossover earlier. The GBP/USD is expected to stay near 1.2735 level with price movement tilted to the downside re-testing the round big figure of 1.2700 before targeting 2018 low of 1.2662.  

GBP/USD 1-hour chart