GBP/USD Daily Price Forecast – GBP/USD Unlikely to Scale 1.32 Handle As Brexit Woes & Dovish Macro Data Forecast Pressure British PoundTuesday’s UK earnings report to be a quick flash in the pan with Brexit angst looming overhead.
The GBP/USD gapped lower at the weekly opening, falling as low as 1.3084, on news indicating that no progress was made regarding Brexit on weekend talks which ended without a solution to the Irish border issue. The Sterling slowly ground higher from such low, accelerating its recovery after London’s opening, with the pair reaching a daily high of 1.3181 before finally retreating. Brexit made it to the headlines all through the day on Monday, with Brexit Secretary Raab and PM May speaking before the House of Commons, but adding no new hopes for a deal. EU’s Tusk sent an invitation letter to EU governments ahead of Wednesday’s summit, which further cooled down hopes as he said that Brexit is “more complicated than expected” and adding that a no-deal is more likely than never before.
Impact of Macro Data Outcome on British Pound Could Decide Directional Move of the Pair
As of writing this article, the GBPUSD pair is trading near flat at 1.3150 down by 0.02% on the day ahead of London market hours owing to strong bearish influence from local market. Now that last weekend’s hopes for a well-grounded plan to have a Brexit has come down with the potential for the UK to remain within the EU’s customs union for an undefined amount of time following Brexit-day next March, UK Prime Minister Theresa May is drawing significant ire from hard-line Eurosceptics within her own ruling conservative party. Brexit is expected to remain main driving force of GBP for next 48 hours as a Brexit outline was initially slated to be proposed during Wednesday’s European Union leadership summit.
Meanwhile, adding to already bearish consumer sentiment British Pound is facing bearish pressure from dovish forecast in macro data. Tuesday brings Average Earnings figures for the UK at 08:30 GMT, and Sterling market participants are bracing for an expected contraction in the headline figures, with the q/y figure (not including bonuses) into August expected to print at 2.8%, a mild tick lower than the previous quarter’s 2.9%. In the 4 hours chart, a mild bearish 20 SMA capped the upside, while technical indicators have retreated from their mid lines, now heading nowhere but within negative ground. Much of the upcoming direction, however, will be more linked to Brexit headlines than to technical readings, with chances of a bullish breakout on renewed hopes pushing the pair to retest the recent high in the 1.3245 price zone. Expected support and resistance for the pair are at 1.3130, 1.3095, 1.3050 and 1.3170, 1.3200, 1.3245 respectively.