GBP/USD Price Forecast – British Pound Trades Range Bound on Renewed Brexit Hopes

Hopes for soft brexit keeps the pair sustained in range-bound price action with a positive bias.
Colin First

The GBPUSD pair yesterday saw sharp two-way price action on news-driven momentum. The saw a sharp drop below mid-1.28 handle immediately after Bank of England’s monetary policy update. BOE kept interest rates unchanged but downgraded its forecast for economic growth for the year ahead from 1.7% to 1.2%  to GDP and this served as a trigger for the decline. However, the pair soon recovered from the loss and shot up all the way till 1.2996 where strong resistance from 1.30 handle prevented further gains. The upside move was inspired by hopes for soft Brexit deal following German Chancellor Angela Merkel’s comments that she believes Irish border issue can be resolved even without reopening the withdrawal agreement on Britain’s departure.

News Driven Momentum Capped At 1.30 Handle

Hopes for soft deal Brexit albeit lacking clear fundamental support has helped GBP stay strong near previous session highs. Investors now await headlines on PM May’s visit to Dublin for negotiations with her Irish Counterpart Leo Varadkar in regards to an alternative for Irish backstop agreement. Across the majority of Asian market hours, GBPUSD pair traded range bound near and above mid 1.29 handle. As of writing this article, GBPUSD pair is trading at 1.2942 down by 0.26% on the day. Range-bound action is expected to continue until further updates on PM May’s negotiation with Irish Counterparts hits the market. Headlines indicating at positive progress will help pair reclaim 1.30 handle and help GBP establish bullish price rally, while disappointing headlines will lead to the pair resuming recent downside price move.

Moving forward, investors await today’s macro data updates for short term profit opportunities. On the release front, UK calendar remains silent for the day, while U.S. calendar will see the release of WASDE report and U.S. Baker Huges oil rig count both of which are unlikely to have any lasting impact on the pair’s price action. When looking from a technical perspective, the pair is out of bear’s territory for a short time frame owing to previous session rebound. But the pair needs to scale above 1.30 handle to achieve bullish breakout while a fall below 1.2900 handle is required for bears to take control of the price action until which range bound action is likely to continue steadily.

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.