GBP/USD Daily Price Forecast – Brexit Woes Continue to Pressure British Pound on Bears Path

Wednesday sees the Pound teetering on the edge of further losses if bidders can’t keep the wheels on amidst Brexit headlines that point south. A heavier showing on the docket for the following US session will see market sentiment clash with reporting figures in the day ahead. The GBP/USD is trading near 1.3000 ahead of Wednesday’s London market session after a whimpy Tuesday that saw the Cable peak at 1.3044 before bedding back down after premature hopes on Brexit headlines once more gave way to discouragement amidst broader risk-off market sentiment. As of writing this article, the pair is trading near flat with dovish tone at 1.2974 down by 0.07% on the day. The European Union offered UK Prime Minister Theresa May an Irish border workaround on Tuesday.

Irish Border Issue is Main Thorn in Brexit Negotiation

But this was an entirely separate agreement to Brexit, involving a broad-UK customs union in order to circumvent the current Irish border backstop. However this agreement was falling short when compared to PM May’s demands which involved a total workaround that will be included in the final Brexit agreement. Markets saw a brief spark of hope on the news, but reality once more crashed in for a landing, taking the Cable back down below 1.3000 to finish up Tuesday. The pair has since traded near flat with dovish tone slightly below 1.30 handle. On release front, the UK’s calendar is very silent except for the update of gross mortgage approvals. On the other side of Atlantic in US market will see release of New home sales data for September Followed by German Manufacturing PMI for month of October, Euro zone manufacturing PMI, Markit Composite PMI & Services PMI for October and crude oil inventory data.

The Cable could be setting up for further downside as bulls continue to stumble out of the gate. From technical perspective, the GBP/USD pair settled below the 1.3000 figure after hitting a fresh weekly low of 1.2936, with the bearish case supported by the unsolved Brexit negotiations. Technical readings in the 4 hours chart support a downward extension, as the price is currently developing below a firmly bearish 20 SMA, which extends its slump below the 200 EMA, as technical indicators remain within negative ground, although with no certain directional strength. The main bearish target for the upcoming sessions continues being 1.2880, the 61.8% retracement of the 2016/18 rally. Expected support and resistance for the pair are at 1.2955, 1.2920, 1.2880 and 1.3000, 1.3040, 1.3085 respectively.