GBP/USD Daily Price Forecast – GBP/USD Trades Flat Ahead of BOE Rate Decision

The GBPUSD pair moved downtrend post FOMC update but remains trapped in this week’s short price band range. As of writing this article the pair is trading at 1.3101 down 0.20% when compared to closing price of Wednesday however a look at hourly chart shows that the price is flat when compared with Wednesday’s Asian session as pair moves in a range of 1.3095 to 1.3113 handle and the pair continues to maintain strong support around mentioned price range. While some analysts believe that the Sterling is trading into familiar territory for the week ahead of the Bank of England’s highly-expected rate hike others are of opinion that BOE rate hike might not go off with slumping economic data for the UK, which could see the Sterling heading for new 2018 lows during today’s trading session. The GBP/USD saw July end the month near where it started as momentum bleeds out of the major pair on a still-muddy Brexit.

Sterling’s Long Term Outlook Remains Rocky

Today’s market hours brings the latest Monetary Policy Statement from the BOE as well as the central bank’s interest rate call, all dropping at 11:00 GMT; a 25 bps rate hike from the BOE has been highly anticipated, but a recent slump in UK economic data has left the odds of a rate hike on the low side, and yesterday’s Markit PMI dropped to 54.0, below the market’s broader expectations and slipping further away from the previous reading, implying a slowdown for the UK could be on the cards for England’s domestic economy. Brexit concerns also remain close to the surface, with trade talks between the EU and the UK continuing to make little progress, despite the official deadline of March 2019 fast approaching and no final deal in sight. Talks are set to resume in mid-August with Prime Minister Theresa May at the helm, taking over Brexit negotiations personally.

Major focus continues to remain on BOE ahead of London market hours as traders argue over “will-they-or-won’t-they” answer to the UK’s anticipated rate hike. While medium term outlook could turn positive if BOE hikes the rate, long term outlook continues to remain dovish as downside remains wide open due to Brexit tensions. Pound gains are expected to be short-lived, ahead of a clearer picture on Brexit and this provides a lot of opportunity for investors to make profit from short term trends caused due to fluctuating volatility in favor of both side of currency pairs. From a technical point of view, the pair retains its neutral stance in the short term,  as in the 4 hours chart, it remains stuck to a directionless 20 SMA, while technical indicators continue pivoting directionless around their mid-lines. Expected support and resistance for the pair are at 1.3090, 1.3045, 1.3010 and 1.3140, 1.3180, 1.3210 respectively.