GBP/USD Daily Price Forecast – Brexit Talks Remain Main Driver of GBP/USD Despite News Related Momentum from US Market

The GBP/USD is continuing to hold steady just above the 1.2900 level after the pair wound up middling near the technical handle through last week, and renewed hopes for a passable Brexit deal are about to face down Monday’s GDP reading for the UK economy. The EU’s lead Brexit negotiator, Michel Barnier, could be getting a new mandate from European Union leaders in Brussels, and the move could show the EU is ready to begin meeting the UK in the middle on key issues amidst the deadlocked negotiation process, and UK Prime Minister Theresa May could get a much-needed break as the UK’s PM continues to be stuck in a logjam between immobile EU negotiators and wild-eyed Brexiteers within her own ruling party.

Positive US Wage Data & NFP Data Helps USD Battle GBP’s Brexit Inspired Strength

As of writing this article, GBPUSD is trading flat at 1.2913 down by 0.02% on the day. The reason for limited movement in the pair in early hours of Asian market session could be viewed as influence of strong US Greenback in broad market. The NFP headline was slightly above expectations but the positive surprise came from acceleration in wage growth. It sent US yields to the upside adding more strength to the greenback. A sustained rise in wage-price inflation could force the Fed to hike rates well above the neutral rate. However, as of now, wages are not rising that fast, nevertheless, Friday’s big number could lift inflation expectations and strengthen the expectations of faster Fed rate hikes. Meanwhile on Brexit talk front, if leaders agree at the September 20 meeting, diplomats expect a final set of guidelines to be formally adopted at the October summit of EU leaders, setting the stage for a special Brexit summit in November, where the two sides would aim to conclude talks.

Today’s data release schedule is silent in US markets while UK will see Manufacturing Production data along with release of GDP data. As news based momentum provides strong support for both sides of the currency pair, there hasn’t been any clear signs of breakout resulting in pair trading flat on first trading session of the week. The Sterling may see glimmers of hope for today, but the Pound-Dollar pairing remains firmly in the bearish camp. The pair has failed multiple times in its attempts to extend gains beyond the 1.3000 level in the last month but closed the week right above the key 1.2890 region, the 61.8% retracement of the 2016/18 rally. In the daily chart, a bullish 20 DMA converges with the mentioned Fibonacci support, reinforcing it, while technical indicators turned neutral, lacking directional strength around their midlines, signaling that buying interest remains limited. According to the 4 hours chart, the risk is skewed to the downside, as the price is barely holding above a mild bullish 20 SMA, while technical indicators turned sharply lower, now challenging their midlines. Expected Support and resistance for the pair are at 1.2880, 1.2845, 1.2800 and 1.2945, 1.2980, 1.3010 respectively.