GBP/USD Daily Price Forecast – GBP/USD Moves Range Bound Ahead of UK Inflation Data UpdatePound buyers are enjoying some Brexit relief as PM May and the EU’s Michel Barnier appear set to begin working together towards a solution.
The GBP/USD is testing into 1.315 handle after slipping away from the current week’s highs, but remains close by as improving Brexit sentiment bolsters the Sterling ahead of Wednesday’s UK CPI reading. Stiff-nosed Eurosceptic within Britain’s Tory party are seeing Prime Minister Theresa May break significant ground in talks with the EU, with Brussels’ head Brexit negotiator and PM May taking turns announcing that they are willing to reach fair middle ground in talks in order to avert a disorderly Brexit, and calls by the hardline Brexiteers to vote down any trade agreement that PM My secures with the EU, regardless of content, are largely being ignored for now as Pound traders experience some much-needed relief on Brexit headlines after months of stonewalling and unmoving negotiations.
Brexit Optimism Helped Cap USD’s Gains on Surging Treasury Bond Yields
As of writing this article, GBP/USD pair is trading at 1.3156 up 0.08% on the day. The GBP/USD pair stalled its recent upsurge, with a modest US Dollar rebound on Tuesday prompting some profit-taking on Tuesday. With investors looking past the latest escalation of the US-China trade spat, surging US Treasury bond yields helped the greenback to recover early lost ground to near seven-week lows. However, Brexit optimism continued to underpin the British Pound and helped limit and immediate sharp decline for the major. The pair regained positive traction during the Asian session on Wednesday but once again failed to build on its momentum beyond the 100-day SMA immediate strong hurdle.
Today’s UK economic docket highlights the release of latest inflation figures for the month of August. The headline CPI is expected to tick down slightly to 2.4% y/y from 2.5% previous and any positive surprise would be enough to provide the required momentum for GBP/USD to finally break through the near-term barrier. From a technical perspective, any meaningful up-move from current levels is likely to confront fresh supply near a short-term ascending trend-line, around the 1.3190-1.3200 region. The said hurdle, along with another ascending trend-line now seems to constitute towards the formation of a bearish reversal – rising wedge chart pattern, on the 1-hourly chart, indicating that the recent up-move might have already started to lose momentum. A convincing break below the pattern support, currently near the 1.3145-40 region, will reinforce the bearish set-up and prompt some aggressive long-unwinding trade.