GBP/USD challenges 50-DMA at 1.2450, UK parliament vs. Article 50

Currently, GBP/USD is trading at 1.2446, up 0.63% on the day, having posted a daily high at 1.2471 and low at 1.2367.

It seems inevitable to fear the worst when multiple participants are on a collision course. To the left, there is a patriotic PM willing to 'no deal' rather than a bad deal, then the Article 50 which design was not expected to be required, later the UK parliament that may have the last word in the ongoing drama and finally, UK's Supreme Court to rule out if things can go May's way.

Once again, the British pound recovers and challenges its 50-day SMA; but for how long? Friday's meeting between the newest figure on the block, Donald J. Trump, and Theresa May provides more questions that answers to traders and investors and at least in the short-term, the possibility to strike a cooperation deal between both parties under the present circumstances is far from boost the pound's uptrend past the next immediate resistance; 100-DMA.

Historical data, however, indicates that GBP/USD highest performance in the last 3-weeks clocked at +3.01% (Jan.17) and the lowest around -1.19% (Jan.18)

Wolfgang's negotiations blueprint for Britons; Switzerland

Caroline Mortimer, reporter at The Independent, reports, "He told the Swiss newspaper Neue Zurcher Zeitung (NZZ) that he had advised the UK to find a “wise political solution” to Brexit. “Britons should take as an example how cleverly Switzerland has linked national sovereignty and close cooperation with the European Union,” he said." 

She further writes, "Switzerland is not a member of the European Union but has signed a series of bilateral trade deals which mean it has to accept free movement of people and certain trading rules, as well as contributing to the EU’s budget."

London; business as usual?

Tom Campbell, author of 'Fold and The Planner' and writer at The Guardian, notes that anyone who has recently spent time in the UK capital can attest, the referendum itself seems to have done little to dent the animal spirits of London’s consumers. Restaurants, shops and bars seem as busy as ever. Tourism numbers have held up and there is evidence that the weakened pound has encouraged more international visitors to stay and spend.

He further writes, "But London is not Barcelona or Rome. It is a city with a population of more than eight million, and an economy the size of Belgium’s. Its prosperity has depended not simply on tourism, but on being a leading centre for business, finance, education, technology and the creative industries. Will such sectors, so essential to London’s economic and cultural identity, maintain their dominance once Britain is outside the world’s largest trading block?"

Technical levels to watch

To the upside, upside barriers aligned at 1.2546 (100-DMA) and above that at 1.3182 (200-DMA). While supports are aligned at 1.2251 (horizontal support) and below that at 1.1985 (low Jan. 16). On the other hand, Stochastic (5,3,3) are running into the overbought territory, this may serve as further confirmation that a top might be around the corner. 

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 1.3978 (short-term 38.2% Fib) and 1.4153 (long-term 23.6% Fib).

GBP/USD analysis: sellers waiting at 1.2500