GBP/USD Forecast: Sterling Back To The Old Range As Global Worries Bite Amid Brexit Stalemate

• The GBP/USD is trading little changed on the downside as global growth worries favor safe-haven greenback.
• The UK Prime Minister Theresa May failed to deliver a new strategy and a Plan B for Brexit deal while speaking in parliament.
• The UK labor market report is expected to deliver strong figures with wages rising 3.3% over the year and the unemployment near a 4-decade low of 4.1%.

The GBP/USD is trading little changed on the downside at around 1.2850 returning back from above 1.2900 amid Brexit stalemate and the global growth worries

While the UK Prime Minister Theresa May failed to deliver a comprehensive new strategy for the Brexit deal that was rejected with a stunning margin of 230 votes in the House of Commons last week, the European Union broke the ranks with Polish Foreign Minister suggesting the Irish backstop should be limited to five years. The temporary backstop is not official negotiation strategy of EU yet, but various officials already admitted that getting Brexit right is in the utmost interest of the EU.

The UK labor market due 8:30 GMT is expected to confirm tight conditions with the unemployment rate near a 4-decade low of 4.1% in November while wages are expected to rise a strong 3.3% in the three months to November period. Fundamentally the UK labor market tightness confirms the Bank of England’s path of one interest rate hike a year.

The technical picture points to the downside for the GBP/USD that has broken away from the long-term downtrend last week rising towards 1.3000 after the UK Prime Minister May survived a no-confidence vote Wednesday last week. The correction mode on GBP/USD is underlined by the upmove exhaustion with the technical oscillators also pointing downwards. The Slow Stochastic made a bearish crossover within the Overbought territory indicating further downside potential to build up with the GBP/USD returning to the old range of 1.2800-1.2900. 

While 1.2800 is a short-term target on the downside for GBP/USD, the pair needs to break back below the trendline at 1.2750 to extend the downside towards 1.2610. On the upside, the 1.2900 and 1.2990 remain the immediate targets. 

GBP/USD daily chart