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- GBP/USD to extend above 1.3000

- Pound Sterling eyes parliamentary attempts to block 'no deal' Brexit

- U.S. Dollar eyes survey data this week

The Pound-to-Dollar exchange rate is trading at 1.2883 at the start of the new week after peaking at 1.3000 - on the nose - in the week before, when it rose by 0.25% from open to close.

Gains were mainly put down to a rise in Sterling as dealers discounted the possibility of a ‘no deal’ Brexit, but a rebound in the Dollar on a recovering U.S. stock market led to a pull-back from off the 1.3000 highs.

The technical picture remains constructive and the pair is, on balance, more likely to continue rising than not.

The break and close above the downtrend line from the April highs is a huge bullish plus for the outlook, and we see the potential for a continuation up to 1.3070 over the next 5 days, conditional upon a confirmatory break above the 1.3000 highs.

The daily chart shows the pair formed a bearish 2-bar reversal pattern (circled) at the end of last week. 2-bars are formed when a long, green up-day is followed by a long, red down-day of roughly equal length.

This could indicate short-term weakness and a pull-back down to the trendline again - perhaps in a temporary ‘throwback’ move before the pair resumes its uptrend.

The sharp fall-off in momentum which accompanied the formation of the 2-bar is a negative sign too, which further supports the possibility of a correction beginning.

How the pull-back highlighted by the bearish pattern might play out, is pictured on the 4-hr chart, where a trendline drawn from the January 3 lows provides support at around the 1.2775 level, and there is a strong chance this could be where the correction finishes up before resuming its uptrend.

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The Dollar: What to Watch

PMIs are survey-based activity indicators which often provide a good leading indicator of economic growth.

Manufacturing is forecast to decline slightly to 53.5 in January from 53.8 in the previous month and Services to 54.2 from 54.4.

Existing Home Sales is the next major release. It is forecast to show a drop of - 1.0% in December as higher mortgage rates and lack of affordability continue to erode demand. Analysts at Wells Fargo expect an even deeper -1.9% contraction to take the market by surprise, which could potentially weigh on the Dollar.

“After rebounding 1.9% in November, we are expecting existing home sales to fall by an identical amount in December. Sales have been held back by higher mortgage rates in November and December and poor weather, which kept many potential home buyers indoors. Sales are also being hindered by a lack of affordable product, and overall inventories remain relatively low,” says a note from Wells Fargo previewing the coming week's events.

Retail Sales data for December was supposed to be released last week but had to be postponed because of the government shutdown which is now affecting departments which compile economic data. There is a chance, however, that it could be released in the week ahead, and if so, it could impact on the Dollar.

Retail sales was forecast to post a ‘solid’ 0.2% rise - the same as in November - but if the lower results published in the UK is anything to go by, a surprise miss in U.S. data is possible which would hurt the Dollar.

Durable goods orders are out at the end of the week and although they are expected to be delayed because of the shutdown, the consensus expectation is for a 0.2% rise for core and 1.8% rise for headline goods in December, when data is released at 13.30 on Friday.

The Pound: What to Watch

"MPs will tomorrow unveil their plan to hijack the agenda of the Commons to suspend article 50, the mechanism by which the UK is leaving the EU," reports The Sunday Times.

Any motions aimed at preventing a no-deal Brexit are tipped to have a good chance of being voted through since it is the only option which appears to be supported by a majority of MP’s. If it is passed, it will further reduce the probability of a disorderly hard-Brexit and support the Pound further.

The Sunday Times meanwhile reports the Prime Minister Theresa May will meanwhile likely disclose her 'plan B' option aimed at salvaging her Brexit deal.

"She wants to offer a bilateral treaty to Ireland that would remove the hated “backstop” from the EU withdrawal treaty and prevent a hard border by other means," says Tim Shipman, Political Editor at The Sunday Times.

On the 'hard data' front, the main release is labour market data on Tuesday at 9.30 GMT. The consensus forecast is for 20k jobs to be added in December, for the unemployment rate to remain at 4.1% in November, and for average earnings (including bonuses) to rise 3.3% compared to a year ago, also in November.

A higher-than-expected result would support Sterling. UK data has been mixed recently. Last Friday the Pound floundered after UK retail sales showed an unexpected decline of -0.9% in December, which was below the -0.8% expected, and there is a risk that more data misses will build a picture if decline which further weighs on Sterling.