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GBP/USD Price Forecast – Brexit Woes Continue To Weigh Down British Pound

By:
Colin First
Published: Nov 13, 2018, 06:37 UTC

Sterling slips the 1.2900 level again as Brexit hopes turn back into angst once more.

GBPUSD Tuesday

The GBP/USD pair gapped lower at the weekly opening and was unable to fill it, collapsing to 1.2826 as the Brexit saga continues. Not only weekend news indicated that several UK Ministers were willing to resign, but also, a couple of Cabinet members said this Monday that there’s no chance PM May’s plan will pass the Parliament, therefore jeopardizing May’s leadership. The market was waiting for an emergency Cabinet meeting which finally didn’t occur. A special EU summit on Brexit is now out of the table for this month, and the market doubts about possibility of a meeting in December. The Pound got a boost from FT news, indicating that EU’s Chief Negotiator Barnier said that main elements of Brexit treaty text was ready, but resumed its decline after the market realized the Irish border issue remains unsolved.

Hawkish Macro Data in UK Unlikely To Inspire Bullish Momentum

As of writing this article, the GBP/USD pair is trading at 1.2878 up by 0.23% on the day after making a run at the 1.2900 handle in the early Asian market hours, but renewed Brexit concerns are seeing the Pound get hobbled in the broader marketscape, with previous hopes for a last-minute deal appearing this week once again getting dashed on the rocks. Early Tuesday action sees the GBP getting a relief bounce as the US Dollar pauses across the board, but a continued bull-run is looking unlikely unless today’s UK earnings figures can distract investors from the notable lack of forward momentum on Brexit proceedings. 09:30 GMT today sees the latest quarterly Average Earnings for the UK, with Earnings plus bonuses for the annualized quarter into September expected to print at 3.0%, a tick healthier than the previous quarter’s 2.7%, while Average Earnings excluding bonuses is expected to remain steady at 3.1%.

A better than expected macro data during London market hours could help the pair extend its relief rally for a short while, but bearish bias is expected to remain unchanged in short term. Hopes are waning for any progress to be announced before December’s meeting as well, and steadily-deflating expectations for a soft-Brexit scenario are going out the window, and taking the Pound’s exchange rate with them. Reuters latest survey of UK’s small and medium-sized enterprises (SMEs) revealed that thirty-four percent of firms expect Sterling to fall by more than 10 percent after Brexit. Meanwhile, only 1 percent of firms see the British currency appreciating by 10 percent or more. And this clear proof that market sentiment is slowly turning against British Pound as Brexit talks move towards deadline without any major progress. Expected support and resistance for the pair are at 1.2825, 1.2790, 1.2750 and 1.2880, 1.2935, 1.2960 respectively.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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