GBP/USD Daily Price Forecast – GBP/USD Eases from Overnight Gains Ahead of US FOMC UpdateThe pair could challenge recent highs if the Fed reaffirms gradual rate hike path.
The GBP/USD pair gained momentum late during the US session and broke above 1.3175, hitting at 1.3192 a fresh daily high on Monday and the cable extended gains on its way for the second daily rise in a row. The pound rose across the board following comments from UK PM May from New York. She is confident of keeping to Brexit timetable and mentioned that a general election is not “in national interests.” Her words boosted modestly the pound that printed fresh high versus the US dollar and also the euro. While still less than last week’s high, the pound saw considerable gains and closed for the day with nearly 50pip boost at 1.3180 after rising nearly 70 pips to hit intra-day high on Tuesday in North American market hours.
Brexit News Continues To Remain Main Driving Force Of GBP
The rebound that started on Monday eased bearish pressures. The key driver of GBP continues to be Brexit concerns while Fed’s decision and projections in FOMC statement later today could have a significant impact on USD’s momentum. However, the bullish influence will likely fail if the Fed signals low tolerance for above-target inflation and willingness to push rates above the neutral level of 2.87 percent. On the other hand, the GBP/USD may pick up a strong bid if the Fed reaffirms gradual rate hike path despite rising oil prices and sounds cautious about the impact that trade tensions could have on wages and capital spending. As of writing this article the GBPUSD pair is trading at 1.3171 down 0.07% on the day as profit booking activity ahead of FOMC statement resulted in pair turning range bound erasing overnight gains.
The GBP/USD technicals have regained bullish bias ahead of the all-important Federal Reserve rate decision. The currency pair closed above the 100-day moving average (MA) hurdle yesterday, having defended 1.3055 (38.2% Fib R of 1.2662/1.3299) on Friday. Further, the short-term MA’s (10-day and 5-day) are trending north, indicating a bullish setup. As a result, the stage looks set for a re-test of the recent high of 1.3299. Meanwhile Brexit tensions continue to remain as main focus as PM May has reiterated her statement that no deal is better than a bad deal when it comes to Brexit due to fact that the current middle-ground offer being pushed by the European Union is worse than if Britain underwent a no-deal hard Brexit as the deal would essentially fracture the economic unity of England, Wales, and Scotland. Expected support and resistance values for the pair are at 1.3143, 1.3100, 1.3055 and 1.3194, 1.3213, 1.3290 respectively.