GBP/USD tackles 100-DMA at 1.2530; Brexit bill could struggle before March 7

Currently, GBP/USD is trading at 1.2533, up +0.41% or 52-pips on the day, having posted a daily high at 1.2538 and low at 1.2412.

The British pound vs. American dollar rejected for the second time in the last 5-trading sessions offers below the critical 1.2400 psychological mark. As of writing, the currency pair made an explosive recovery adding almost 100-pips from today's low.  

Historical data available for traders and investors indicates during January 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.

Passing Brexit Bill, not 'an easy' task

Joe Watts, Political Editor at Independent UK, reports, "Theresa May will not find it “plain sailing” as she rushes to have her Brexit bill approved by March 7, a senior Tory has warned. Lords were told that the Prime Minister’s timetable shows she wishes legislation permitting her to trigger Article 50 to have passed all stages by the first Tuesday in March. It would allow Ms May to use a European Council summit two days later to officially launch the Brexit process, though she could wait longer if she wished."

He further writes, "There is some chance for delay in the Lords, with amendments potentially debated including ones seeking a guarantee for EU citizens rights, a vote on leaving the single market, on having a second referendum and on the terms of the final vote in Parliament on Ms May’s deal, which is likely in two years."

Technical levels to watch

In terms of technical levels, upside barriers are aligned at 1.2672 (high Jan..26), then at 1.2773 (high Dec.6) and above that at 1.2960 (horizontal resistance). While supports are aligned at 1.2417 (50-DMA), later at 1.2259 (low Jan.20) and below that at 1.2017 (low Jan.17). On the other hand, Stochastic Oscillator (5,3,3) seems to head south, therefore, there is evidence to expect further 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 1.3210 (short-term 23.6% Fib). However, without removing the 'hard' dark cloud from all Brexit negotiations, the sterling faces a gargantuan resistance level against the 1.2850-80 region, then at 1.3978 (short-term 38.2% Fib) and later at 1.4153 (long-term 23.6% Fib).

GBP/USD Forecast: turns vulnerable to retest 1.2420 support area