GBP/USD Daily Forecast – Brexit Chaos Continuing to Grapple Cable

The GBP/USD pair had showcased an ascending triangle formation in the earlier hours of the day. Though there was a slight decline initially, the Cable grasped a quick pick up marking day’s high near 1.2665 levels. However, the pair lost ground laterwards suffering a significant pullback making it reach near 1.2645 levels.

Considering the rising uncertainties around Brexit, investor sentiment seem to get hurt. In the last couple of days, the investors seem to shift more to safe-haven assets than the risky Cable.

Brexit Paralysis might Stay for Long

As disclosed earlier, current UK PM Theresa May would step down from office on June 7. Her departure would pave the way for the contest to elect the next successor for UK Leadership. Boris Johnson seems to possess the most chances to grab the PM’s seat. In his latest talk to the Press, he had mentioned that he would make Brexit happen at any cost. Boris added that EU-UK divorce would occur even in the absence of a Brexit deal.

Along with a higher probability of a Hard Brexit, chances of a third extension in the exit deadline also stays high. After the new PM taking control of the Brexit, he might negotiate the deal to alter the Irish backstop. However, the EU might likely remain stubborn over its stand and deceives the UK’s request. If the PM goes ahead with a Hard Brexit, then opposition from the EU Parliament is imminent. Such scenarios would add to a further delay in the whole process. Even during the same time, the EU Officials would be busy in electing the President European Commission. This situation would leave the Officials with less time to focus over other external affairs.

A recent CBI Employers group survey revealed the inferior status of UK’s Services Sector since last three months over Brexit delay. Reports suggested that around 8% of Companies have reported a sour sentiment in the business sector than the previous quarter. Also, among the Consumer Services Group, the numbers recorded 12%.

GBP/USD Influencing Events

There are no significant GBP-specific or USD-specific events lined up for the day. However, some low volatile USD events are coming up later the day.

The MBA Mortgage Applications computed since May 24 will report at around 11:00 GMT. The Redbook Index data would come up with the monthly and yearly data at 12:55 GMT.

Technical Analysis

The significant 50-days, 100-days, and 200-days Simple Moving Averages (SMA) stood above the pair, alluding bearish outlook. However, at 04:00 GMT, the 100-days SMA crossed over the 50-days SMA, which signaled for a near-term bear call. The Relative Strength Index (RSI) was hovering around 35 levels. This position of the RSI reflected a moderate selling among traders. Somehow, if the pair gains strength and move upwards then pair may find resistance near 1.2748 levels.