GBP/USD Price Forecast – Brexit Angst Continues To Pressure GBP

GBPUSD pair continues to suffer owing to Brexit uncertainties. The pair saw sharp two-way price action yesterday as GBP saw positive price action early in the day but lost all its gains from the early session on disappointing UK macro data update. However, news hit the market that EU officials are open to an extension of article 50 deadline from the UK which caused the pair to shoot up to mid 1.295 handle. However strong resistance near said price level and comments from UK Prime Minister Theresa May who reaffirmed her stance that UK will leave EU on the deadline of March 29 as previously decided and this resulted in pair moving back below mid 1.28 handle post which the pair maintained range-bound price action.

Hopes For Article 50 Extensions Prevent Further Declines

American market hours saw US Greenback regain its positive price rally following upbeat U.S. CPI update. This sentiment surrounding US Dollar improved further in Pacific-Asian market hours as investors in Asian market turned cautious ahead of Sino-U.S. trade talks. European investors are also expected to maintain caution ahead of today’s UK parliament session. This has strengthened dollar bulls in the broad market, leading to Dollar regaining control of price action in the broad Forex market. As of writing this article, GBPUSD pair is trading at 1.2822 down by 0.19% on the day. Further downside ahead of London market hours was prevented as news hit the market that former British Ambassadors have requested UK PM Theresa May to extend Article 50 deadline.

The ambassadors view no-deal exit as a disaster for UK economy and want to delay the deadline in hopes of second Brexit referendum or getting a proper deal approved by both EU and UK parliament to prevent UK economy from suffering sharp losses. On release front today, UK calendar is silent for the day while the US calendar sees the release of Core retail sales, PPI and business inventories data updates. While US macro data will provide short term profit opportunities, Brexit headlines will continue to exert control over long term price action. When looking from a technical perspective, the path with least resistance is towards downside as the price is moving well below 20, 50 & 100 MA’s in the intra-day chart while momentum indicators RSI & Stochastic are seeing their signal breach oversold region. Expected support and resistance for the pair are at 1.2800, 1.2795, 1.2760 and 1.2885, 1.2930, 1.2965 respectively.

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