GBP/USD Price Forecast – British Pound Gains on Weak US Dollar

The GBPUSD pair followed a similar price action to EURUSD, however, the downside move suffered by British Pound was lower compared to EURO as caution owing to Brexit proceedings has limited trading activity significantly. Owing to the lack of any solid progress in Brexit front, the pair which opened for the week with a gap up move above 1.32 handle fell sharply all the below 1.3100 handle. The fall was further aggravated by the strength of USD in the broad market earlier this week as USD bulls were underpinned by a spike in long term US treasury yields and upbeat US macro data. Also, talks between EU-UK representatives during Tuesday and Wednesday ended without either party coming to any sort of agreement on key issue – Irish backstop agreement which has been hampering progress relating to Brexit agreement in the UK House of Commons.

US Macro Data Eyed For Short Term Directional Cues

However, the bearish rout in US Wall Street equities, decline in US T.Yields and worse than expected US ADP Non-Farm Employment data helped weaken USD in the broad market resulting in the pair gaining some temporary breathing space. While GBP doesn’t have any factors supporting recovery rally, price action influenced by USD’s weakness helped the pair recover hold above 1.31 handle during Pacific-Asian market hours post which the pair has traded in a consolidative manner. As of writing this article, the GBP/USD pair is trading at 1.3171 up by 0.01% on the day. Moving forward, investors are focused on and await upcoming UK parliament meeting scheduled to occur on March 12, 2019 which now the last chance that lawmakers have to prevent a no-deal exit and attempt to either extend article 50 deadline or push for the second Brexit referendum as the deadline for Brexit as per current agreement is fast approaching at March 29, 2019.

Meanwhile, in immediate future ahead of the UK parliament session investor focus is on macro data outcome for short term directional bias and profit opportunities. In the absence of any high impact headlines and proceedings relating to Brexit, the strength of USD in the broad market is likely to dictate the price momentum of the pair. On release front today, the UK economic calendar remains silent while the US macro calendar will see the release of Initial Jobless Claims data, Q4 Non-Farm Productivity data and Unit Labor Costs update. A positive US macro data outcome will lead to USD pushing the pair back below the 1.3100 handle. Expected support and resistance for the pair are at 1.3100, 1.3050 and 1.3190, 1.3220 respectively,

Please feel free to let us know what you think in the comments below.