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- Markets wary of fresh turmoil following rejection of Brexit deal next week

- GBP/EUR exchange rate eyes 1.1190 target

- GBP/USD looks for support at 1.2711/1.2662 to hold

Pound Sterling is seen under heavy selling pressure at the start of the new week with traders shedding exposure to the currency ahead of the December 11 Brexit deal vote in the House of Commons.

"Brexit uncertainty continues to weigh on the Pound ahead of a crucial Commons vote next week," says Robert Howard, an analyst on the Thomson Reuters currency desk. "With a political storm approaching and year-end notorious for illiquid conditions and fragile risk appetite, Sterling may be the worst currency to hold."

Prime Minister Theresa May is expected to continue her publicity push to sell her Brexit deal both to the public and parliamentarians this week with members of the House of Commons expected to debate the merits of the deal for five days ahead of the December 11 vote.

Estimates show there should be around 221 MPs willing to support the deal, the government therefore faces a shortfall of at least 99 votes to push the deal across the line to allow the UK to leave the European Union in March 2019 with a deal in place.

The problem for Sterling is that the loss of the vote on December 11 then opens up the door to further potential scenarios and outcomes, creating a toxic mix of uncertainty for the already under-fire currency.

"UK PM Theresa May seems to face a hopeless task trying to get her Brexit deal through parliament on December 11, and the uncertainty is sure to weigh on the Pound. It's worth betting it could fall further in the political battle that would follow the deal's rejection," says Howard.

The Pound-to-Euro exchange rate is quoted at 1.1217 at the time of writing; near a solid support level that if broken could invite further declines.

Robin Wilkin, a foreign exchange strategist with Lloyds Bank says a move through support located at 1.1190 "would open the potential for further" declines towards range lows in the 1.11-1.0980 region.

The move lower in Sterling seen already this week puts our week-ahead forecast for GBP/EUR published on the Sunday in good standing.

The Pound-to-Dollar exchange rate is meanwhile quoted at 1.2707, down over 0.35% on the day's open.

Karen Jones, a technical analyst at Commerzbank in London says should the exchange rate break down through support at at 1.2711/1.2662, we could see further weakness triggered and the exchange rate liable "to fall to the 61.8% Fibonacci retracement of the 2016-2018 advance and the June 2017 low at 1.2593/89."

We had expected the U.S. Dollar to underperform Sterling at the start of the week, courtesy of the optimism triggered by the trade war ceasefire agreed between China and the U.S. at the G20 summit in Argentina on the weekend. The U.S. Dollar tends to struggle when stock and commodity markets are rising.

That Sterling is falling even against the Dollar is instructive of just how unloved this currency is at present.

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