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

News filled day ahead is likely to keep the pair active across London and U.S. market hoursbut downside move looks highly likely.
Colin First
GBPUSD Thursday
GBPUSD Thursday

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.

Please let us know what you think in the comments below

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.