GBP/USD Daily Price Forecast – Pound Moves Lower Pressured by Brexit Woes & Dovish BOE

The GBP/USD is trading just above the 1.30 major technical level after seeing a familiar sell-off pattern on Thursday. The British pound was very volatile during the trading session on Thursday after the central bank statement and interest rate hike as investors view the rate hike as a bearish sign which resulted in Sterling failing to rally in response to the Bank of England’s decision to raise the bank rate 25bps to 0.75%. Sterling still took a nose dive after the BOE’s Governor Mark Carney suggested that the pace of future rate hikes will be incredibly slow, with the BOE projecting to engage in further rate increases around once a year. Brexit concerns are also dragging on the Sterling, with EU-UK trade deal negotiations set to begin anew in a couple of weeks with UK Prime Minister Theresa May personally heading up trade negotiations, to the chagrin of her fractured ruling party within the UK parliament, with hard-line Brexiteers likely to reject any initial offers from the EU amidst calls that PM May is too willing to bow to European demands.

US NFP Outcome is Main Focus of Investors For Last Trading Session of The Week

Sterling is fundamentally cheap and the economy is holding up reasonably well. But uncertainty is dominating in thin summer markets. Moving forward progress on Brexit is needed to encourage buying interest in the pound, which remains rudderless for now. Prime Minister May is keen to build support for the UK government’s plan for its future relationship with the EU ahead of key meetings with heads of state in September and, most importantly, the October EU Summit. GBP/USD had the worst daily close since mid-July as the pair is trading just above 1.3010 July 18 low. Investors are focused on the US Non-farm Payrolls and the Average Hourly Earnings scheduled to release later today at 12:30 GMT which can potentially lead to further volatility in the currency pair.

Early Asian market hours today saw GBPUSD pair move slightly below 1.3010 hitting an intra-day low of 1.3005 before resuming movement above 1.3010 handle. The pair gained some bearish momentum yesterday and the breakout below 1.3010 becomes almost bound to happen with bears looking at 1.2957, the current 2018 low based on outcome of NFP data. Looking at release front, UK market will see release of the Markit Services PMI at 08:30 GMT, forecast to come in at 54.7 versus the previous showing of 55.1 but the mid-tier indicator will be largely overshadowed by the US NFP job report, which drops on markets at 12:30 GMT to cap off a disappointing week for the Pound. Technically the GBP/USD pair is biased lower, with room to break below the key 1.30 threshold given that in the 4 hours chart, it is developing well below a bearish 20 SMA, while the Momentum indicator heads firmly lower within negative territory as the RSI tries to stabilize around 29. Expected support and resistance for the pair are at 1.3000, 1.2970, 1.2945 and 1.3045, 1.3085, 1.3120 respectively.