GBP/USD Price Forecast – British Pound Trades Rangebound On Brexit UncertaintiesRangebound action to continue as British Pound lacks a clear direction bias owing to clouded outlook on caution ahead of EU’s vote on article 50 deadline extension.
The GBPUSD pair saw rangebound price action across yesterday’s trading session having seen highest close since June 2018 on Wednesday influenced by Breixt optimism following UK parliament’s vote against the no-deal exit. Traders had already priced in the extension of article 50 deadline well ahead of UK parliament vote given the obvious nature of the current scenario and as a result, the pair failed to see any further upside move when updates hit the market that Parliament has voted to delay the deadline. This led to GBPUSD pair consolidating around 1.32 handle yesterday. While opposing party leader Jeremy Corbyn has reiterated his stance on the need for UK citizens to vote on Brexit (second Brexit referendum) given the impact of same on UK’s economy, the parliament session yesterday saw lawmakers abstain to vote on same.
EU’s Vote on Brexit Delay Eyed Before Traders Place Major Bets
Given the lack of any move that could change Brexit progress, investors have held back from placing major bets awaiting further updates. Current market scenario is one in which uncertainties surrounding Brexit is high as key decisions from EU’s end are still pending. The outcome of parliament vote was in favor of deadline extension but the timeline for delaying deadline hasn’t been decided yet as PM May will make one last attempt to convince lawmakers to accept her deal on March 20 ahead of EU members meeting scheduled on March 21 when they will vote on duration of deadline as EU members have final say on deadline extension. The time frame for deadline extension will be 2 months in case UK MP’s accept PM May’s deal, while a longer duration of delay will be required in case they reject her deal for third time on March 20.
The uncertainty over the timeframe of dealy in deadline and the possibility of EU’s response is the main thorn in GBP’s end as it prevents further gains in the meantime. As of writing this article, GBPUSD pair is trading flat at 1.3224 down by 0.10% on the day. Investors are now on the lookout for macro data updates and headlines influenced momentum for short term profit opportunities as the trading session comes to close for the week. On the release front, Britain’s economic calendar is silent for the day, while US economic calendar will see the release of Industrial production data, JOLTs Job Openings, Michigan Consumer sentiment, and Michigan Consumer expectation data updates. When looking from a technical perspective, the pair now lacks a clear directional bias as the price action is seeing a consolidative move above 1.32 handle. Moving forward, a clear break above 1.3255/1.3265 handle is required for bulls to gain momentum and a break above 1.3290 handle is required for upside move to gain dominance in short to near term outlook while a breakout below 1.3200 handle is required for bears to gain momentum and a break below 1.3150/48 handle is required for dominant bearish price action outlook in immediate and near future trading sessions.
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