GBP/USD Daily Price Forecast – GBP/USD Holds Steady near Five Weak High above 1.30 Handle on Positive Brexit Headlines
The GBP/USD pair struggled to find direction following the mixed macroeconomic data releases from the UK during the first half of Monday but gained traction during the early trading hours of the NA session to advance to its highest level in five weeks above the 1.30 mark. With the trading volume thinning out toward the end of the day, the pair eased from its highs and closed for the day at 1.3028 up 0.77% on the day. The EU’s Chief Brexit Negotiator, Michel Barnier, said that it was possible to reach a Brexit deal in 6 to 8 weeks and added that the Chequers plan was useful for them. Boosted by these remarks, the GBP gathered strength against its major rivals and the GBP/USD pair added more than 100 pips while the EUR/GBP lost over 50 pips. As of writing this article, in Asian market hours the GBPUSD pair is trading at 1.3057 up 0.24% on the day ahead of London’s Tuesday market session as Sterling bulls continue to ride a train of bullish headlines surrounding Brexit.
Investors Focus on UK Earnings Report as Outcome from Same Could Make or Break Ongoing Bull Run
Eurosceptic Tories in the UK Parliament are in full retreat today after The Financial Times broke news that their attempt to produce their own version of what should happen to the UK following Brexit came apart at the seams. Headlines have been leaking over recent days that the EU is slowly rolling over into a position that will make it easier for the UK to negotiate a successful trade deal, and Pound bulls have been seizing on the good news and pumping up the GBP on Brexit hopes for the second time in two weeks. On release front yesterday, In UK’s markets the data released by the National Statistics revealed that the UK economy expanded by 0.3% in July to surpass the market expectation of 0.2%. On a negative note, both the industrial and manufacturing production figures fell short of the market consensus while the trade balance shrunk by more than forecast. Meanwhile the only data from the U.S. on Monday showed that the total amount of consumer credit rose to $16.64 billion in July from $8.46 billion in June.
Today’s market hours will see another iteration of the UK’s Average Earnings at 08:30 GMT, which are expected to tick upwards from 2.7% to 2.8%, while US markets will see JOLTS jobs data which is forecast to go down from 6.662M to 6.646M. From technical perspective, the pair is trading firmly above the 1.3000 figure and not far below yesterday’s five week highs, offering a bullish short-term technical perspective, particularly as previous attempts to break above the mentioned threshold were quickly reverted. In the 4 hours chart, the price surpassed its moving averages, with the 20 SMA about to cross above the 200 EMA, both converging around 1.2940. Indicators in the mentioned chart have stabilized well above their mid-lines, holding near daily highs but losing upward momentum given that the price can go beyond the mentioned daily high. Nevertheless, the upside is favored, with scope now to test 1.3170 price handle. Expected support and resistance price levels are at 1.2985, 1.2940, 1.2890 and 1.3060, 1.3095, 1.3130 respectively.