GBP/USD Price Forecast – GBP To Suffer Losses As Bearish Pressure Builds Up On Brexit Chaos

GBPUSD pair continues to trade range bound near 1.31 handle as trading session approaches the weekend. On last trading session of the week, bulls seem to have lost steam and bears seem to have started taking control of market as proceedings of major geopolitical events seems to have taken a bearish tone. The two-day Sino-U.S. trade talks ended on a positive note with headlines indicating that key issues such as better access for US products in Chinese markets and Intellectual property transfer rights were addressed. But there hasn’t been a trade deal yet and current scenario suggests that despite favorable progress a deal may not be reached as US President Trump wants no stones left unturned when the deal is done and deadlines is approaching fast.

UK Manufacturing PMI Update To Provide Directional Cues To British Pound

Further Brexit progress also seems to be suffering as EU has clearly mentioned that they are not ready to renegotiate Irish backstop agreement. UK is also fixed on this issue as one major point where they want EU to change their stance resulting in a deadlock. PM May wants to leave EU regardless of deal or no-deal scenario at pre-arranged March deadline. However given current scenario no-deal exit seems to be only possibility as PM May is unlikely to submit a favorable deal during UK Parliament session of February 13, 2019 and there are no signs of possibility for second Brexit referendum or extension of article 50 in near future. This has caused overwhelming bearish pressure to return to the market and GBP bulls are beginning to feel the brunt of it.

While US Dollar’s weakness in the broad market helped limit declines so far this week, Dollar has begun to gain strength supported by better than expected macro data outcome and fading influence of dovish Fed update. As of writing this article, GBPUSD pair is trading flat at 1.3103 up by 0.04% on the day. Moving forward investors focus in on today’s macro calendar as economic data release today will define the directional course of near term price action. UK market will see the release of Manufacturing PMI while US market will see release of Non-Farm Payroll data, ISM Manufacturing PMI and Unemployment rate data updates. Dovish UK macro data will push the pair well near mid 1.30 handle where the pair is expected to continue range bound action for rest of next week as US macro data are also likely to see dovish reading preventing the possibility of sharp declines during today’s trading session.