GBP/USD – British pound drops on Brexit blues

GBP/USD has posted slight gains in the Tuesday session. In North American trade, the pair is trading at 1.2733, down 0.60% on the day. On the release front, British retail sales volume jumped to 19 in November, crushing the estimate of 10 points. Later in the day, we’ll get a look at the BRC Shop Price Index. In the U.S., CB Consumer Confidence dipped to 135.7, missing the estimate of 136.2 points. On Wednesday, the U.K. releases bank stress tests and the BoE financial stability report. The U.S. publishes Preliminary GDP for the third quarter, with a forecast of 3.6%.

Now that the EU has grudgingly approved the Brexit withdrawal agreement, the Brexit ball is in the hands of British lawmakers. A vote on the agreement has been scheduled for December 11, giving Prime Minister May two weeks to sway a skeptical parliament to pass the deal and leave the EU on amicable terms. The EU has warned that it will not open up the agreement to any changes, so May will have to convince lawmakers that the current draft agreement is preferable to a “no-deal”, hard Brexit.

Prime Minister May will have her work cut out for her, with the Labor party set to torpedo the agreement and many Conservative MPs unhappy about the U.K. remaining in a customs union with the continent. As well, the DUP is concerned that the agreement, which keeps Northern Ireland in a customs union with Ireland, weakens the link between Northern Ireland and the rest of the United Kingdom. This could well be the political battle of May’s life – if she is unable to shepherd the deal through parliament, there will be calls for her resignation, which could lead to early elections in the U.K.

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GBP/USD Fundamentals

Tuesday (November 27)

• 6:00 British CBI Realized Sales. Estimate 10. Actual 19
• 8:30 US FOMC Member Clarida Speaks
• 9:00 US HPI. Estimate 0.4%. Actual 0.2%
• 9:00 US S&P/CS Composite-20 HPI. Estimate 5.3%. Actual 5.1%
• 14:30 US FOMC Member Bostic Speaks
• 10:00 US CB Consumer Confidence. Estimate 136.2. Actual 135.7
• 12:00 US Fed Chair Powell Speaks
• 19:01 British BRC Shop Price Index

Wednesday (November 28)

• Tentative – British Bank Stress Test Results
• Tentative – BoE Financial Stability Report

*All release times are EST

*Key events are in bold

GBP/USD for Tuesday, November 27, 2018

GBP/USD November 27 at 11:45 EST

Open: 1.2809 High: 1.2820 Low: 1.2730 Close: 1.2738

GBP/USD Technical

GBP/USD was flat in the Asian session and posted considerable losses in European trade. In the North American session, the pair posted small gains but has since retracted

• 1.2706 is providing weak support
• 1.2812 is the next resistance line
• Current range: 1.2706 to 1.2812

Further levels in both directions:

• Below: 1.2706, 1.2589 and 1.2488
• Above: 1.2812, 1.2915, 1.3048 and 1.3173

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