GBP/USD weeping back below session highs, markets look to BoE dovish implications

• GBP/USD bears looking to a break of 1.3100 to open risk to the trendline support and confluence of 78.6% Fibo.
• Brexit bill passed, but markets ignore it as already priced in.
• The bigger news will come from-critical data coming up this week ahead of the BoE.

GBP/USD is trading 0.58% higher on the day, unnerved by the news that the House of Lords just approved the Brexit bill, a factor well and truly already factored into the price of the pound. 

The price has pulled back from the highs of the session, around 1.3150, which were made following a CBI report that showed that the UK manufacturing sector was robust. In the same vein, the Quarterly Business Situation Index flew to +23 in January, reversing the from -44 in October disappointment and marked its highest level since April 2014. 

Brexit updates

Meanwhile, addressing the Brexit updates, the bill will officially become law when it receives Royal Assent from Queen Elizabeth, something that could happen as soon as Thursday.

"Earlier on Wednesday, the lower house of parliament, the House of Commons overturned changes the upper house, the House of Lords, had made to the legislation, including a clause to ensure protections for child refugees after Brexit,"

– Reuters reported. 

BoE in focus

Meanwhile, markets main attention will be on the next round of critical data from the UK economy in the lead into the Bank of England at the end of this month.

Some analysts see the PMIs as make-or-break for the Jan BoE decision. Analysts at TD Securities, on the other hand, believe the hard data has been soft enough to justify a rate cut anyway:

"We had initially expected a 2pt gain for the services PMI, but the extreme weakness in retail into year-end had us downgrade our forecast to 51.0. For mfg we look for a smaller gain, as there seem to be more fundamental issues."

GBP/USD levels

GBP/USD has rallied to the next resistance structure that would be expected to hold and allow the opportunity for a prolonged fad should the 1.3100 round number and support give out. A 50% man reversion of the latest swing highs and lows opens risk to 1.3093 while the 61.8% Fibo and 21-hour allignment its at 1.3080. 1.3070 comes as a prior resistance and the 78.6% Fibo which meets the trendline support is located at 1.3060.