GBP/USD Daily Forecast – Sterling Turns Lower From 1.2900 Resistance

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Published: Nov 26, 2019, 09:45 UTC

GBP/USD has eased back a bit after a strong start to the week. Major resistance at 1.2904 triggered the turn, and while below it, I think the pair might make another run for range support near 1.2800.

GBP/USD Outlook Ahead of UK Election

With the election in the United Kingdom just over two weeks away, we might start seeing a bit more movement in GBP/USD. But for now, the pair remains in a range.

In fact, it has traded in a range for six weeks now. The allure of a Brexit deal in January seems to be underpinning the exchange rate after a roughly 5% gain in October. But at the same time, the pair has struggled to move higher above the major 1.3000 price point. I suspect that pattern may hold unless there is a material change in election outcome expectations.

The latest poll showed Johnson’s Conservative party continuing to lead although the margin has been narrowing a little bit in the early week. My expectation is that GBP/USD could start to see more upside closer to the election as long as Johnson holds this lead.

Technical Analysis

In the meantime, it seems likely that GBP/USD will continue trading within the broader range that has been holding for the past six weeks.

I think the 1.2900 area is fairly big resistance for the pair and I see some potential for a return lower to retest range support at 1.2800.

Recall that the pair failed twice to scale above the 1.3000 handle recently despite how promising price action looked in early last week.

GBPUSD 4-Hour Chart

From a broader perspective, I think the technical outlook for GBP/USD is bullish. The pair has managed to hold on to the impressive gain from October which is an underlying signal of strength. Further, a range is common after a big move up and often precedes more strength. Looking at purely the technical picture of course.

But for this to happen, I think some progress is needed on the UK election front. And in the absence of it, I see more downside for GBP/USD in the near-term.

Bottom Line

GBP/USD has turned lower after a test of 1.2900 resistance.
I see the potential for a retest of range support at 1.2800.
The pair might start to become more sensitive to UK politics as the election is fast approaching.

About the Author

Jignesh Davdaauthor

Jignesh has 8 years of expirience in the markets, he provides his analysis as well as trade suggestions to money managers and often consults banks and veteran traders on his view of the market.