GBP/USD Daily Price Forecast – GBP/USD Likely to Remain Bearish Ahead of UK’s GDP Update Tomorrow

The GBP/USD pair is trading into 1.2880 after seeing decline on Wednesday, falling from a high of 1.2960 as bearish sentiment continues to factor heavily into the GBP markets. As of writing this article, the pair is trading flat at 1.2881 and is expected to remain locked inside range of 1.2895-1.2852 price handles as bearish influence continues to factor heavily into the GBP markets. Brexit is still an ongoing concern for GBP traders, and negotiations between the UK and the European Union are set to begin anew in the coming weeks with Prime Minister Theresa May taking the reins of talks personally. Several key Brexit ministers within the UK abandoned their posts in protest over the latest proposal tabled by PM May for being too pro-EU, and the UK’s May finds herself caught between a rock and a hard place after EU leaders in Brussels flatly rejected her proposal for being too selective and asking the EU to give up too much sovereignty.

Brexit Woes Continue to Influence Sterling’s Momentum Ahead of UK’s GDP

With Brexit on the front burner and Thursday’s calendar on the thin side, traders will be turning their eyes to Friday’s GDP figures for the UK, with the q/q GDP for 2018’s second quarter expected to improve from 0.2% to 0.4%, and the y/y figures expected to tick up slightly from 1.2% to 1.3%. Though traders will be sensitive to any slumps in the data, the Bank of England (BOE) had a very dovish showing recently.  As the UK’s central bank set for a pace of rate hikes that is much slower than many traders have been hoping for. Before Friday’s action though, the US Dollar side of the GBP/USD will be seeing Initial and Continuing Job Claims later today at 12:30 GMT, ongoing jobless claimant count is expected to tick up to 1.74 million compared to the previous reading of 1.724 million, while first-time claimants are expected to increase slightly as well, forecast to come in at 220,000 versus the previous month’s 218 thousand. However the key news of US market PPI data is expected to move down to 0.2% from 0.3% in previous reading for m/m data, while y/y data is expected to remain unchanged at 3.4%.

From technical perspective, the GBP/USD pair has recovered from the monthly lows but price action indicates that the bearish tone remains intact. According to technical readings in the 4 hours chart, the pair holds far below a bearish 20 SMA, capping advances now at around 1.2950. While technical indicators recovered, they have barely corrected extreme oversold condition which is evident from the RSI currently trying to advance above its 30 level. The bearish potential could ease on a continued recovery beyond 1.2960, but renewed selling interest below 1.2850 should signal a fresh 2018 low during today’s trading session. Expected support and resistance for the pair are at 1.2850, 1.2810 and 1.2920, 1.2960 respectively.