GBP/USD Daily Forecast – Cable Bulls Yawn as the Pair Sustains Consolidation Phase

Cable had initiated trading at the start of this week near 1.2720 levels. Despite lack of significant events throughout the week, the pair continued to plunge. The latest status on Friday morning shows the pair trading near 1.2600 levels. Uncertainties running around Brexit remains the main reason for the tumble rally in the GBP/USD pair.

The pair made the day’s opening near 1.1208 levels and remained consolidated for quite a while in the Asian session. There was a slight upward movement observed in the pair’s movements laterwards on US Dollar fall. The Greenback had dropped as Trump’s latest tweet suggested US tariffs on Mexico. The President mentioned that the US would impose a 5% tariffs on all the goods coming from Mexico. Trump added that he would keep on increasing the tariff rate until the end of the illegal immigration problem.

Meanwhile, there lacked any new Brexit headlines in the last few sessions. The countdown starts for UK PM May’s resignation. Tories had compelled the PM to step down from her position seeing her inadequate approach over Brexit deadlock. Even before her departure, Conservative leaders have started jostling to become the next PM.

Recently, Philip Hammond, Chancellor of the Exchequer, commented that a Second Referendum must resolve the current Brexit impasse. The Chancellor added that in such a case the decision-making must be handed “back to the masses”.

Intending May’s successor, the Confederation of British Industry (CBI) said the no-deal Brexit would have severe damage to UK businesses. CBI also proclaimed that small and mid-sized firm would find difficulty to sleeve up and do the preparations before exit. And, things would worsen for the business sector if the UK exits the EU without making any deal.

GBP/USD Impacting Events

On Friday, the economic docket for the Cable contained only a few low significant events. A few moments ago, the events came out. Among them, the April Consumer Credit reported £0.942 Billion over £0.978 Billion estimates. The GBP/USD pair dropped around 8-9 pips following the lower-than-expected reports.

A few significant US economic data which will come out in the European session will tend to impact the Greenback today. The April Personal Spending report will strike first at 12:30 GMT. The market expects this report come bearish and record low readings this time. Later, the core PCE for both YoY & MoM will display fresh numbers. And, this time the MoM numbers are expected to rise and come near 0.2% to the previous 0%. Meanwhile, the Bureau of Economic Analysis will give the April Personal Income and market expect an increase of 0.2% this time. Further ahead, the Chicago May PMI and the Michigan CSI for May will come out.

Technical Analysis

1-Hour Chart

The pair had remained in the lower part of the Keltner Channels since the start of this week. Things seem to resolve after the heavy selling occurred on the North American session of May 30. However, traders can expect a trend reversal at any point in time as the pair drifts above the center line. The mouth of the KC was bit compressed showing low volatility in the pair’s movements. Relative Strength Index (RSI) was indicating a decrease in the overall momentum, hovering near 50 levels.

1-Day Chart

The broader picture with 1-day Chart shows a strong bearish for the pair. The significant 50-days, 100-days, and 200-days SMA travel well above the Cable. The most interesting point to note is the intersection of the near-term SMA and long-term SMA. The 50-days SMA managed to make a dive from 1.3100 levels and reach near the 200-days SMA (1.2950 marks). Over the longer scale, the RSI also seem lowest since January 2019, pointing near 28 levels.