GBP/USD Price Forecast – British Pound Steady Below 1.315 Handle As No-deal Vote Comes Into Focus

The GBPUSD pair which opened positive yesterday suffered a sharp decline on dovish comments from Attorney General Geoffrey Cox and was further pressured by UK parliament’s rejection of PM May’s deal making it her second defeat. Post parliament vote, PM May assured that there will be another session to vote on No-deal exit followed by a session to vote on an extension of Article 50 tomorrow. This led to rangebound price action near overnight lows in early Asian market hours. EU has already begun preparing for the no-deal scenario and has calculated a rough outlook on economic impact and prepared guidelines for member nations to follow in no-deal Brexit outcome. Given the fact that the EU is not ready to negotiate further as visible from EU Juncker’s warning earlier this week that the legally binding assurance is the maximum concession they were ready to make, there is no point in extending article 50 deadline any further.

UK Parliament Vote on No-Deal Exit Eyed As Odds Favor No-Deal Scenario

This sentiment was reaffirmed by comments from European Council President Donald Tusk’s spokesperson who commented that UK’s request for article 50 deadline extension will only be considered with “credible justification” which suggests that EU members don’t see the rejection of PM May’s Brexit deal in a positive light. This scenario has increased the probability of no-deal exit higher compared to before as the UK doesn’t have enough time to prepare or react to no-deal exit outcome owing to PM May’s intentional delay tactics. As of writing this article, the GBP/USD pair is trading at 1.3142 up by 0.52% as hopes for a positive outcome on the vote to avoid a no-deal scenario provided some level of support to GBP bulls in late Asian – early European market hours. Moving forward, all eyes are focused on UK parliament vote for directional cues but investors have mostly priced in the outcome of the vote into ongoing price rally.

The only way for British Pound to gain solid momentum now is either for EU to accept UK’s request for a deadline extension or proceed forward with initiating second Brexit referendum to avoid Brexit altogether. Meanwhile, investors are also on the lookout for macro data updates for short term profit opportunities. On the release front, UK calendar will see the release of the Annual budget statement and Spring forecast statement while US calendar will see the release of Core durable goods orders, PPI and Crude oil inventories data. When looking from a technical perspective, the path with the least resistance is towards downside as odds of no-deal Brexit scenario is high at the moment. Expected support and resistance for the pair are at 1.3100, 1.3050, 1.3030/1.3005 and 1.3150, 1.3200, 1.3255/85 handles respectively.

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