GBP/USD Daily Price Forecast – GBP/USD Unlikely to Ride on Greenback’s Momentum amid Brexit Woes

The British Pound opened positive for the week against US Greenback and has been trying to regain ground above 1.31 handle from where it fell last Friday on news of US President Trump’s plans to proceed with implementing additional tariffs on Chinese goods which caused USD to gain ground on last trading session of the week despite subdued price action across the entire week. While dollar denominated pairs such as EURUSD saw heavy declines in broad market post announcement, GBP’s decline could be viewed as moderate in comparison owing to local news which has greater influence on British Pound. As of writing, GBP/USD pair is trading at 1.3081 up 0.08% on the day. Since trading began for the day, the pair has been drifting upwards ahead of London market hours as Brexit woes still have greater influence on Sterling regardless on US Greenback’s strength in broad market.

President May Has Little Support From UK On Brexit Negotiations

The UK Tory party is expected to vote on Prime Minister Theresa May’s struggling Brexit plan which has already been returned face-down by European Union leaders in Brussels, and the hard-line Eurosceptic conservatives are also expected to turn their noses up at PM May’s third option proposal, leaving the PM treading water in trade negotiations with the EU with little support from her own home front. Meanwhile the UK’s Environment Secretary Michael Gove gave a decidedly upbeat review of the Bank of England’s (BoE) Governor Mark Carney in an interview with BBC and according to Secretary Gove, while no-deal Brexit scenario could have high level of impact on country’s economy, Carney’s approach could help keep Sterling’s decline limited and chances of recovery from Brexit impact could be weathered by the nation despite difficulties involved.

This news could be viewed as positive supporting factor for Sterling as British Pound has of late been on steady bearish tail wind in broad market. The proceedings on Brexit and macro updates in later half of the week are expected to keep British Pound supported in broad market despite overwhelming support for USD due to ongoing Sino-U.S trade war proceedings. Technically, the daily chart shows that the pair has retreated from a fresh 6-week high not far below the 50% retracement of the 2016/18 rally. The pair remains above a bullish 20 SMA, while technical indicators are easing the Momentum nearing its mid-line and the RSI still close to overbought levels, limiting chances of a steeper decline, which will depend on Brexit headers rather than on dollar’s strength. Expected support and resistance for the pair are at 1.3050, 1.3010, 1.2970 and 1.3085, 1.3125, 1.3170 respectively.