GBP/USD Daily Price Forecast – GBP/USD Back above 1.28 Handle on Trump’s Vocal Disagreement over Fed Rate Decisions

The GBP/USD pair extends its recovery from thirteen-month lows of 1.2662 into the fifth day today, with the bulls now looking to regain the 1.2850 barrier heading towards the European session. The latest leg higher in the spot can be mainly attributed to the ongoing decline in the US dollar versus its main competitors, in response to Trump’s reiteration of his displeasure at the Fed’s rate hike policy. Meanwhile, the higher-yielding Sterling also takes advantage of the risk-on market environment, as the Asian stocks advance on hopes that trade tensions between the US-China may ease. The focus now remains on the lower-level trade talks due to start this week between the two superpowers. As of writing this article, the pair is trading at 1.2839 up 0.34% on the day.

Investors Increase Short Positions over Busy Calendar Schedule in Next 24 Hours

Also, the GBP trades look forward to the releases of the first of a series of notices on how to deal with a hard Brexit later this Thursday. However, the next big event risk for the major remains the Fed’s monetary policy meeting due tomorrow at 1800 GMT. In the meantime, the UK public sector net borrowing and CBI industrial orders data will offer some trading momentum to the pair. A look at price action on the 4 hr and daily charts for last week indicates that this upswing is temporary as British pound still remains bearish in long term outlook. This is evident from the lack of positive reaction for GBP last week despite the macro data outcome. While few could argue that macro data was disappointing, it was not worse when compared to readings from earlier this year.  Brexit woes continue to drag down GBP but dollar’s weakness following Trump’s vocal disagreement on fed rate hike decisions has temporarily provided a breather for the pair.

Dollar is sure to resume upward movement in near future as there is no reason to stop the rate hikes from the Fed’s point of view as long as US as economic outlook remains positive.  When looking from technical stand point, the pair is short-term positive according to readings in the 4 hours chart, although Brexit jitters continue to be a major drag for the Sterling with not much room to the upside. In the mentioned chart, technical indicators have entered the positive territory, the Momentum lagging but the RSI advancing at 60, as the price managed to extend its advance beyond a still directionless 20 SMA.  Expected support and resistance are at 1.2790, 1.2720, 1.2690 and 1.2880, 1.2918, 1.2955 respectively.