GBP/USD Daily Price Forecast – GBP/USD Moves Downwards As Brexit Deal Faces Pressure from Both Sides

The GBP/USD is trading into 1.2860 ahead of Tuesday’s London market session after slipping on Monday as weekend Brexit headlines took their toll on Pound buyers. Brexit headlines weighed on GBP overnight, with UK Prime Minister May’s Brexit plans coming under attack from both sides. European Union Chief Negotiator Barnier said he “strictly” opposed key parts of the proposals. At home, Boris Johnson said the plan would mean “disaster” for Britain, adding to existing speculation that May could face a leadership challenge from pro-Brexit conservatives. According to the results of a Reuter’s poll odds are roughly 1-in-4 of a hard-style exit from the EU for the United Kingdom. Talks took a hopeful turn last week when Barnier struck a notably reconciliatory tone, but headlines over the weekend saw the brakes applied to any expectations of a quick resolution. As of writing this article, the pair is trading at 1.2863 down 0.07% on the day.

Investors Focus on Carney’s Testimony in Parliament for Signs of Shift in BOE’s Current Fiscal Policy

On release front, UK’s side of market will see release of latest Construction PMI for the year into August at 08:30 GMT, forecast to dip from 55.8 to 54.9, while the big news of the day will be the UK’s Inflation Report Hearings, due at 12:15 GMT and will see the Bank of England’s Governor Mark Carney and several of the MPC members testifying before the British parliament on the current state of inflation within the UK economy, as well as the central bank’s economic outlook. No deviating statements are expected during the hearings, but traders will have to keep an eye out for any talking points that might indicate a shift in the BOE’s current fiscal policy stance owing to Brexit hardships. On US side of market, ISM Manufacturing PMI is expected to see a dovish outcome forecast at 57.6 while previous value is at 58.1, however this news is expected to have very little impact on market owing to influence from geo-political events.

Meanwhile US Greenback continues to gain strength as the trade dispute between the United States and China continues to escalate. With direction in which Brexit deal is heading, bearish potential remains built into the GBP/USD. When looking from technical perspective, the pair is struggling around the 61.8% retracement of the 2016/2018 rally, unable to recover above it ever since mid-London morning yesterday, which increases the risk of another bearish extension for the upcoming sessions. In the 4 hours chart, the pair is trading below its 200 EMA and 20 SMA, while technical indicators consolidate near oversold readings, also leaning the scale toward the downside. Expected support and resistance are at 1.2845, 1.2800, 1.2770 and 1.2910, 1.2955, 1.3000 respectively.