GBP/USD Price Forecast – British Pound Trade Positive On Hopes of Possible Article 50 Extension

GBPUSD pair has continued to trade positive across the week despite relatively subdued risk appetite in the broad market as Brexit progress keeps GBP bulls sustained. The pair yesterday hit a new two-month high breaching past 1.30 handle as Brexit talks are seeing a high paced progress in the UK as the deadline is closing in with each passing day. Now that PM May has won the vote of confidence in UK parliament, she is focusing on setting up cross-party talks to move forward with Brexit as it is impossible for PM May to submit a new Brexit deal in UK parliament by Monday deadline. While PM May is firm on her stance that no-deal scenario exit is on the table, labor party leader Jeremy Corbyn continues to insist that the no-deal scenario is taken off the table for any further discussions relating to Brexit.

US Dollar Weighed Down By Partial Govt Shutdown

Given the fact that UK parliament doesn’t have any plans to support the economy and move forward with no-deal Brexit scenario, investors are hopeful that MP’s could force PM May into extension of article 50 – Brexit deadline and this hope backed GBP bull’s on their upside action breaching 1.30 handle for the first time in over two months. However, the pair has since dropped from previous session highs and is trading steady in the upper half of 1.29 handle supported by high risk appetite in the market. Investors risk appetite was further boosted on headlines that US officials are considering reversing tariff’s on Chinese import goods to reduce the impact of trade war on the US economy and close the trade deal with China. As of writing this article, GBPUSD is trading flat at 1.2974 down by 0.08% on the day.

While USD gained momentum supported by positive US macro data update, it failed to create a breakout as Greenback is still being pressured by partial shutdown in US government and Fed’s dovish stance on rate hike decisions greatly weakening Greenback in the broad market.  On release front today, UK’s calendar will see the release of retail sales data while US calendar will see the release of Michigan consumer expectations and sentiment data. Macro data updates are expected to keep the action in currency pair high across the day, but British Pound is expected to close for the week on positive note supported by high risk appetite and optimism surrounding Brexit progress (article 50 extension). Expected support and resistance for the pair are at 1.2930, 1.2870, 1.2815 and 1.3000, 1.3045, 1.3100 respectively.