GBP/USD Price Forecast – British Pound Trades Positive As Market Resumes Usual Activity Post Holiday Season

The Sterling was among the best performers against the greenback in the last trading day of the year, surging to 1.2814, to finally settle in its comfort zone around 1.2750. The Pound surged on comments by Foreign Minister Hunt, who said that May’s deal could pass the Parliament if the EU provides clarification that the Irish backstop will be temporal. However, EU’s Juncker said Monday that the UK needs to “get its act together,” as is not up to the EU to resolve British problems. This suggests that Brexit will continue to remain a thorny issue limiting any solid upside move in favor of GBP.  Meanwhile No-Confidence vote on PM May & Parliamentary approval of Brexit deal schedule to occur later this month also add bearish pressure on GBP.

Macro Data To Be Overshadowed By Brexit Headlines

GBP/USD is building a near-term base close to 1.2750 after the pair managed to stage a halting recovery from this week’s lows near 1.2600, but the upside continues to look limited as January comes in with plenty of Brexit action to keep Pound bull’s off-balance. On release front today, both USA and UK calendar are scheduled to see release of respective market’s Manufacturing PMI for December 2018 but it is likely to see little impact as investors brace once again for Brexit headlines. Moving forward this month, Prime Minister Theresa May is finally delivering her much-despised Brexit withdrawal agreement for a parliamentary vote after several weeks of strategic delay which is expected to be turned down by lawmakers during upcoming vote as well.  As of writing this article, GBPUSD pair is trading at 1.2769 up by 0.13% on the day.

PM May’s original strategy of ‘bleeding the clock’ by withholding her divorce bill until it was too late to form an alternative should the bill fail is also looking completely declawed, with key MP’s in Britain’s parliament seeking to secure a Brexit delay in case of an (almost guaranteed) no-vote on May’s deal, a move that will draw plenty of ire from hard-line Brexiteers within May’s own Tory party, who are perfectly happy to see the UK collapse out of the European Union without any semblance of a trade deal in place. When looking from technical perspective, price action paints a positive picture for GBP in near term but Brexit proceedings could shake out any bidders caught in a near-term bullish move.  Expected support and resistance for the pair are at 1.2710, 1.2665, 1.2630 and 1.2785, 1.2820, 1.2850 respectively.