GBP/USD Daily Price Forecast – GBP/USD Aims For 1.2880 on Weak USD While Brexit Woes Keep Gains Limited

Having fallen for six consecutive weeks, the GBP/USD pair finally managed to post a weekly gain, finishing Friday at 1.2848. Pound gains, however, were quite limited, as Brexit woes kept demand for the UK currency in check, even despite broad dollar’s weakness. News that the UK and the EU are planning to hold non-stop talks to try to reach an agreement as late as next November, gave a modest boost to the pair mid-week, but the UK government papers on how to deal with a no-deal Brexit dented the positive sentiment, highlighting the economic suffering such scenario will bring to the kingdom. There is no major impact events scheduled for in the UK this week, with the Inflation Report Hearings on Tuesday being theonly news that could provide some sort of volility to the pair from UK’ s market. As of wrting this article, the pair is trading at 1.2843 down 0.05% on the day.

USD Weaker on Dovish Comment from Fed Chair Powell’s Testimony

The downside consolidation in the US dollar has managed to keep the bid tone intact around the GBP/USD pair, as the bulls yearn for a break above the 1.2880 resistance for a sustained break higher. Fed Chair Powell’s mildly dovish speech at the Jackson Hole Symposium has left the Dec rate hike in doubt, suggesting that the flattening of the US yield curve would be allowed to continue, which exerted bearish pressure on the US dollar. The Treasury yield curve reached its flattest level since 2007 on Friday. Meanwhile, the major also benefits from a better sentiment towards risk assets on the back of higher Asian equities, following record highs on Wall Street. However, markets remain wary over further upside amid a lack of fresh fundamental drivers and looming Brexit uncertainty, as the UK government readies for a no-Brexit deal.

The pair continue to look for fresh impetus from the sentiment on the global equities amid holiday-thinned trading and data-empty UK docket for today. The main event risk this week remains the US prelim GDP release due out on Wednesday. The 4 hours chart for the GBP/USD pair indicates that the ongoing decline could continue In the daily chart, the pair is struggling also with a bearish 20 DMA, while technical indicators turned modestly higher, the Momentum stuck around its mid-line and the RSI currently at 45, also suggesting a limited upward potential. Expected support and resistance for the pair are at 1.2800, 1.2770, 1.2720 and 1.2900, 1.2935, 1.2960 respectively.