The GBPUSD pair yesterday saw a sharp upside price move on headlines driven momentum. Headlines recently hit the market that PM May is planning to officially rule out no-deal Brexit scenario and this is likely to extend the Brexit deadline. Further news that EU officials have shown readiness to extend the deadline till 2021 and Opposition party leader Jeremy Corbyn is aiming to facilitate a second Brexit referendum while supporting no-deal Brexit scenario further increased optimism surrounding Brexit. This helped GBP bulls stage solid positive price action in the broad market. Further, the tweet from US President Donald Trump over the weekend on positive progress of Sino-U.S. trade talks and delay in the deadline for a deal between two nations boosted risk appetite in the broad market.
Brexit Optimism Continues to Underpin GBP Bulls
Risk appetite in the market saw a solid boost on Sino-U.S. trade deal optimism and this caused US Dollar to weaken in the broad market. Weak Dollar added further strength to GBP bulls resulting in the pair breaching 1.31 handle yesterday. Investors now await UK parliament meeting where further details on immediate progress of Brexit are likely to be decided. As of writing this article, GBPUSD pair is trading at 1.3155 up by 0.45% on the day. Ahead of tomorrow’s UK parliament session investors await macro data updates for short term profit opportunities. In the mean time, headlines relating to Brexit will continue to dictate price action of GBPUSD pair. Investors are now focused on Speech by UK PM May and Bank of England’s quarterly Inflation hearing which Governor Mark Carney and all monetary policy committee members are expected to attend for short term directional cues.
Aside from UK’s inflation hearing and PM May’s speech, there are no major macro data updates scheduled to release in the UK while US market will see the release of Building permits and housing starts data along with a speech by Fed Chair Jerome Powell. While US market hours is expected to see increased volatility post Fed Chair Powell’s speech, the same is unlikely to have a lasting impact as Brexit progress remains as the main driving force behind the pair. When looking from the technical perspective, the path with least resistance moving forward is to the upside. The pair faces strong resistance near 1.3200/1.3215 which needs to be breached for continued price action in favor GBP while strong support near 1.3100 needs to be breached in immediate downside followed by support near mid 1.30 handle for US Greenback to re-establish rally in its favor.
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