GBP/USD Daily Price Forecast – GBP/USD Hits New 2018 Lows on Brexit Woes

The GBP/USD is trading above 1.2960 heading into Tuesday’s London market session after slipping from the 1.30 major handle on Monday amid fresh concerns regarding the UK’s ability to avert a hard Brexit. The UK’s efforts to split from the European Union are back in focus this week, with Brexit negotiations set to begin again this month with Prime Minister Theresa May at the helm of trade talks. Fears that the UK will be heading into the official Brexit day next March are on the rise, taking the GBP down the charts for four straight weeks, with the UK’s own trade secretary Liam Fox putting odds of a hard Brexit at 60-40. Little meaningful data exists on the calendar today for the GBP/USD, and traders will be forced to face the full brunt of bearish Brexit winds; monthly and quarterly Halifax Housing Prices are due at 07:30 GMT, with the m/m index expected to slip from 0.3% to 0.2% while the quarterly/yearly number is forecast to bump upwards to 2.6% over the previous 1.8%. The pound remains fragile on Tuesday after falling to an 11-month low against the dollar overnight on worries over a ‘hard’ Brexit from the European Union, while simmering U.S.-China trade tensions provided support to the greenback. The pair hit intra-day low of 1.29197 overnight, it’s lowest since early September.

Dollar’s Weakness Resulted in Small Rebound in Favor of Sterling

While US dollar remains positive in broad market with support from Sino-U.S trade war and positive earning in stock market, intensifying trade wars has put investors in state of caution which has resulted in US Dollar seeing a bearish set back. US Dollar index which traded positive for majority of Asian session is currently at 95.22 down 0.14% on the day indicating dollar’s temporary weakness against broad market. Both Euro & GBP are seeing slight rebound from their bearish momentum and as of writing this article GBP/USD is trading at 1.2967 up 0.18% on the day. However looking at macro data outcome & current political climate in England, the fundamental support for British pound to make a recovery remains highly unlikely which also means that any rebound in today’s trading hours could likely see steep reversal in case of Greenback favoring market news.

Looking at the pair from technical perspective, the pair has bounced from the 2018 lows but remains at levels last seen in September 2017 well below 1.30 handle, which is a major psychological resistance in immediate and near future market.  In the short-term, the pair is extremely oversold, but there are no signs that a bottom has been reached, as in the 4 hours chart, the pair plunged well below a now bearish 20 SMA, while technical indicators remain in neutral territory RSI momentum indicator is aiming to resume its decline currently at 22. As long as pair remains below 1.30 handle any rebound in favor of USD could easily erase intra-day gains and also push the pair on further steep decline. Expected support and resistance for the pair are at 1.2920, 1.2885, 1.2840 and 1.2965, 1.3000, 1.3045 respectively.