GBP/USD Price Forecast – Brexit Chaos Continues To Drive British PoundCaution ahead of tomorrow’s UK parliament meeting and UK 10-year Gilt yields keep Sterlings gains limited but weak USD and positive influence from change in Brexit control dynamics underpin Sterling bulls preventing sharp declines.
The GBPUSD pair has retained rangebound price action over the course of the last three trading session. While headlines influenced a short burst of upside price action yesterday, the pair still closed in the red. Following EU decision to grant UK’s request for Brexit deadline extension with conditions attached to same, but uncertainties that followed with same cap Sterling’s gains. News hit the market early last evening that PM May was aiming to conduct the third meaningful vote on her Brexit deal today. Sterling gained an upside boost on the news and hit an intra-day high of 1.3246 handle. But fell from intra-day highs as the news was denied PM May’s spokesperson shortly. Further, news hit the market that lawmakers in House of Commons yesterday voted on Letwin amendment.
Change in Brexit Control Dynamics Welcomed by Traders & UK Citizens
The amendment gives control of Brexit proceedings to lawmakers instead of the government. However, the main focus on the report of the amendment was the fact that the amendment saw support from 30 conservative party members. This is clear proof that PM May is continuing to lose support and control over her government. While the British Pound suffered a sharp loss on denial of the third vote from PM May’s spokesperson, the change in control dynamics of Brexit progress is highly welcomed in the UK and global market. This helped the pair retain its hold above mid 1.31 handle during Asian market hours today. As of writing this article, GBPUSD pair is trading at 1.3186 down by 0.12% on the day. UK’s 10-year gilt yield fell below 1% mark for first time since 2017 also adding dovish pressure on Sterling.
Moving forward, the price action of the pair will be determined by the outcome of tomorrow’s vote in the house of commons on various amendments for moving forward with Brexit. In immediate future though, the focus is on macro calendar updates for short term profit opportunities. On the release front, UK’s calendar is silent for the day, while the US calendar will see the release of CB consumer confidence data, Building permits, and housing starts data updates. Caution on Brexit proceedings is likely to continue limiting Sterling’s gains today while Brexit updates provide directional cues. Traders await US macro data updates for short term profit opportunities in the day ahead. The pair will see range-bound price action across European and American market hours as both sides of the pair face dovish pressure in the broad market. Expected support and resistance for the pair are at 1.3150, 1.3110, 1.3082 and 1.3240, 1.3285, 1.3300 respectively.
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