GBP/USD Daily Price Forecast – USD Breaches 1.30 level as Brexit Woes Weight down Sterling

The GBP/USD is trading into the bearish side as the new trading week begins to unwind, and traders are remaining on edge as Brexit concerns return to the forefront. The Bank of England’s (BOE) Governor, Mark Carney, stepped up recently and voiced concerns over current Brexit conditions, stating that the ever-rising odds of a hard Brexit scenario are “uncomfortably high”, and UK ministers are warning that European Union leaders in Brussels are at risk of breaking their own laws if they continue to refuse to give up any negotiating ground while the UK seeks to secure trade agreements with the EU prior to the official Brexit date of March 2019. After last week’s BOE action that saw the UK’s central bank disappoint markets with an anticipated pace of rate hikes that fell far short of expectations, this week sees a fairly muted schedule for the GBP, and broader markets will be turning their eyes to the US inflation figures due later this week, though Monday will be seeing the UK’s y/y BRC Like-For-Like Retail Sales for July, which is forecast to slow to 0.4% compared to the previous period’s 1.1%.

Market Remains Void of Major Impact News This Week

As of writing this article, the GBP/USD pair has moved below 1.30 handle for second time this month and is currently trading at 1.2996 with 0.06% decrease in value. With Brexit back on the front burner once again, the Sterling is facing bearish pressure back into 2018’s lows after July failed to generate a meaningful bounce for GBP buyers to latch onto, a continued decline could see the GBP/USD sliding well beyond 1.29 handle. Daily candles show the GBP/USD firmly in a bearish trend, and July’s half-hearted pullbacks see resistance levels priced in at regular intervals. For the USD this week will be focused on the upcoming Consumer Price Index figures, though the reading isn’t due until Friday and the economic calendar sees little meaningful data for the US. The dollar holds firm against a basket of its peers on Monday after U.S. job data reinforced investors’ expectations the Federal Reserve will gradually raise interest rates this year. The Fed kept rates unchanged as widely expected last Wednesday, and gave an upbeat assessment of the world’s biggest economy.

As trading session moves forward, the strength of US Greenback seems to be on rise since Sino-U.S trade war tension is greatly weighing down markets and Chinese yuan. The pair is technically bearish, given that in the daily chart, the 20 DMA turned modestly lower while attracting selling interest all through the week. The Momentum indicator in the mentioned chart stands flat below its 100 level, but the RSI heads lower, around 36, leaning the scale toward the downside. Shorter term, the downward potential is stronger, as in the 4 hours chart, the pair keeps moving away from a strongly bearish 20 SMA, while technical indicators remain well into the red, with modest downward slopes. Expected support and resistance for the pair are at 1.2970, 1.2925, 1.2885 and 1.3045, 1.3085, 1.3120 respectively.