GBP/USD Price Forecast – GBP To Trade Range Bound In 1.30 HandleThe pair lacks direction bias and trades range bound awaiting cues from UK construction PMI update.
The GBPUSD pair is trading in consolidative action above mid 1.30 handle having suffered sharp declines last week. UK parliament session at the end of January saw an outcome which resulted in Brexit Chaos returning to the forefront and all optimism surrounding Brexit evaporating from the market. PM May was given an ultimatum to negotiate with EU for an alternative to Irish backstop agreement with EU for any sort of progress relating to Brexit Plan B approval. Meanwhile, EU officials have clearly refused to budge on their stance relating to Irish backstop agreement resulting in Brexit heading towards no-deal exit scenario. This combined with worse than expected UK Manufacturing PMI on Friday caused the pair to experience sharp declines on Friday.
UK Construction PMI To Provide Short Term Direction Bias
Further positive outcome in U.S. ISM manufacturing PMI & NFP data gave US dollar the strength required to drag the pair below 1.31 handle as the trading session came to close for the week. However worse than expected U.S. Unemployment rate helped limit downside price action well above mid 1.30 handle on Friday. Since two major markets – China & Singapore are closed for the day, the pair saw consolidative price action owing to clear lack of volume and volatility in the market across a majority of Asian market session. As of writing, this article GBPUSD pair is trading at 1.3074 down by 0.07% on the day. Moving forward investors await macro data updates for short term price profit opportunities. On release front today, UK market will see the release of Construction PMI which is expected to see a slight decline compared to previous month readings.
A better than expected data will help GBP bulls climb above 1.3100 handle while disappointing data will lead to price falling below mid 1.30 handle as US dollar has strengthened in broad market since trading session began for the day. US market will see release of factory orders data for month of Nov but the same is not expected to have any impact on price rally. When looking from a technical perspective, the pair lacks a clear directional bias to move forward. The pair needs to breach resistance at 1.3100 handle to resume bullish price action. On the flipside, it needs to breach 1.30 handle and decline below for bears to gain control. As long as price action remains locked within 1.30 handle range bound action is likely to continue in the broad market.