12/11 has become a mark for many to understand not just the political scenario in India but also to know the outcome of the Brexit referendum. The high chances of a ‘no deal’ seem to pulling the cable further down towards the key support level of 1.2715. It last tested that support in Oct end and before that mid Aug it briefly crossed that to gain back towards 1.33 on Sep 20. Pound has not been able to find a comfort zone all thanks to uncertainty of the Brexit outcome.
Only if the pair clearly cuts across the 1.2715 mark, there could be further downside heading towards the key supports at 1.2675 and 1.2630. But breakout from the descending triangle (red horizontal bottom and yellow downward sloping upper trend line) will give a further direction towards 1.2848 (23.6% Fibonacci retracement), after which 1.2937 (38.2%).
If the MPs reject the referendum on Dec 11, there could be a better option to seek an extension on Article 50 (though it’s not that simple) beyond the deadline of March 2019 so that a better deal could be negotiated. Alternatively UK will leave the EU if nothing happens.
Manufacturing PMI for Nov came at 53.1 against expected 51.6; Construction PMI for the same month came at 53.4 higher than expected 52.5 while Services PMI is due tomorrow. Employment numbers from US due on Dec 7 will give further direction to GBPUSD pair. BoE MPC due on December 20 will probably keep interest rates unchanged and take cue from FOMC scheduled a day before.