GBP/USD Price Forecast – Brexit Woes Cap Sterling’s Momentum despite Weak US Greenback

The positive Cabinet meeting outcome from Friday saw sterling bulls make a last gasp push higher, and in early morning trades today there was a gap higher for GBP/USD above the 1.3300 level. That’s the first time the pair managed to get above the figure level in a little over two weeks, but as UK ministers started resigning earlier we saw cable surrender those early gains and fall under 1.3300 before trading near the figure level now as the dollar stays weak across the board. As European traders come in, the largely expected move will be further downside in sterling as political uncertainty weighs. The fact that Davis is gone means May has managed to win out and likely strike a compromise with parliament and her ministers on getting a “soft hard Brexit”.

GBPUSD Lacking Momentum

However, whether or not the people will be happy with it is a separate issue. And this will put May’s authority and position into question, leading to further uncertainty which will greatly weigh on investment and business decisions hence creating a sterling negative over the next few weeks. The key deadline in all of this is trying to come up with a proposal feasible enough to be discussed with the EU by October. May has said they will publish the Brexit white paper later this month and May’s push to appease parliament and the EU is not going to be welcome by the hard Brexit camp and also by the people who voted in the referendum back in 2016. Given the situation, calls for a second referendum won’t be too far down the road which creates an uncertain environment with lots of If’s & But’s resulting in Pound bears making best of the moment despite dollar’s weakness which has capped GBP’s climb at 1.33 price handle.

The UK’s Brexit minister David Davis resigned over the weekend, and Davis’ move spurred other hard-liners within the UK’s Brexit branch to resign as well, and PM May’s latest proposal for a soft Brexit is expected to face heavy challenges from Tory conservatives within the parliament. The Bank of England’s former Monetary Policy Committee (MPC) member Danny Blanchflower stated that the PM’s current tenure could be short-lived following David Davis’ resignation, and after months of threats of a leadership challenge, the Tories may finally make a move to oust the current Prime Minister. Monday brings little to the field on the economic calendar for the GBP, with only a speech due at 07:50 GMT from the BoE’s MPC member Broadbent, who will be delivering the opening remarks at the BoE-hosted Economics and Psychology conference. The Sterling’s latest push has failed to generate a meaningful move above key barriers trapped below 1.3300 for the last three weeks and it needs to sustain gains beyond 1.3450 to make new bullish headway.