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GBP/USD Price Forecast – Brexit Proceeding Continues To Dictate Price Action

The pair trades range bound near critical support levels as USD bulls dominate price action with high chance for brexit proceedings resulting in a bearish breakout.
Colin First
GBPUSD Wednesday
GBPUSD Wednesday

The GBPUSD pair continues to trade with bearish bias as Brexit proceedings weigh down GBP bulls in the broad market. Further, strong dollar supported by upbeat US macro data added to GBP’s woes during yesterday’s trading session pushing the pair below 1.3100 handle, however, comments from Bank of England governor Mark Carney who hinted that there is a high chance of for rate hike in case of a Brexit deal between EU-UK even if its a soft deal or in case there is an extension of article 50 deadline improved sentiment surrounding GBP enough to push it back above 1.31 handle during Pacific-Asian market hours.

BOE Carney’s Comments Was Saving Grace For GBP

As Brexit deadlines approach with each passing day with no clear sign of how the UK is going to move forward given the fact that both sides are eager to avoid a no-deal exit scenario, trade talks began between representatives of both parties yesterday. EU was represented by Chief Brexit negotiator Michael Barnier and UK was represented by Attorney General  Cox and Brexit Secretary Barclay. Despite three hours of negotiation, talks between two parties yesterday ended without any agreement between the two parties resulting in talks continuing to resume today. As of writing this article, the GBP/USD pair is trading flat at 1.3140 up by 0.01% on the day.

Moving forward, the day ahead will see USD bulls dictate price action ahead of the conclusion of EU-UK trade talks today. The outcome of Brexit talks between two parties will provide short term directional bias. UK’s calendar remains silent for the day aside from speech by BOE MPC members Cunliffe & Saunders while US calendar will see the release of ADP Non-Farm Employment and speech by FOMC members Mester & Williams. Macro data updates and speech by central bank members are expected to keep price action volatile and pave way for short term profits. However, a dovish Brexit proceeding will favor further downside move as USD remains strong in the broad market while unfavorable proceedings in Brexit front will add bearish fundamentals to British Pound. Expected support and resistance for the pair are at 1.3095, 1.3060, 1.3010 and 1.3150, 1.3175, 1.3200 respectively.

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