GBP/USD Price Forecast – British Pound Consolidates Above 1.29 Ahead of BOE MPC Update

The GBPUSD pair yesterday achieved bearish breakout during the trading session yesterday but price action changed into consolidation shortly. Following U.S. President Donald Trump’s state of union speech which hurt dollar’s price action in the broad market, the pair began a consolidative move. However, strong US dollar in the broad market resulted in pair experiencing bearish bias despite consolidative action resulting in pair declining below the mid-1.29 handle. US Dollar is currently trading positive on its sixth consecutive trading session despite dovish Fed stance on rate hike plans for 2019 as recent rebound in U.S. Treasury bond yields helped underpin USD bulls in the broad market. Brexit proceedings remain the main driving force of British Pound in the broad market, but the same has been in a stalemate for quite some time now and also shows signs of an unfavorable outcome.

Headlines On May’s Visit To E.U To Provide Directional Cues

For Brexit deal to be approved in UK parliament, Lawmakers have demanded that PM May get Irish backstop agreement replaced with some other deal which E.U. has refused clearly stating that the same is not up for negotiations. Meanwhile, U.K. PM Theresa May is expected to meet with E.U representatives’ today in order for further talks and if rumors are to be believed, PM May hopes to get some concessions or make slight modifications in Irish backstop deal in order to appease U.K. lawmakers. However, it remains to be seen whether such a decision will get the deal approved in U.K. parliament. As both Brexit progress and U.S. Dollar’s strength in the broad market continues to add bearish pressure on GBP the pair is seeing steady downside price action despite managing to hold for above 1.29 handle for now.

As of writing this article, GBPUSD pair is trading flat at 1.2936 up by 0.05% on the day as investors have held back from placing major bets ahead of today’s Bank of England interest rate decision update. On release front today, U.S. calendar is silent aside from release of Initial Jobless Claims while U.K. Calendar sees the release of BOE’s Inflation report, Interest rate decision and meeting minutes. The day ahead is expected to see a high level of action owing to macro data updates and expectation of headlines pertaining to PM May’s E.U. visit. When looking from a technical perspective, the path with the least resistance is towards the downside. Momentum indicators RSI & Stochastic are seeing signal line move towards the oversold region in hourly intra-day charts and well below the oversold region in daily charts. Also, price action in hourly intra-day charts are moving well below 20, 50 & 100 MA’s. For now, the downside seems limited at 1.2920, but a breach below said level will open doors to sharp decline till 1.2869/1.2813 price levels.

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