GBP/USD Price Forecast – GBP/USD above 1.3200 Handle Ahead of Brexit Discussion in Cabinet Later Today

The GBPUSD pair has maintained consolidation above 1.32 handle since Wednesday on momentum gained from holiday thinned market in early half of week and weak US Greenback strength from Sino-U.S trade war related issues with U.S Tariff on Chinese imports going live on early hours of Friday’s Asian market hours. As of writing the pair is trading at 1.3237 with 0.10% increase in value, however the pair is expected to face dovish influence over GBP as Brexit proceedings comes into focus and updates from last 24 hours seem highly unfavorable for UK Prime Minister Theresa May and her latest policy that was reformed early this week. As per the report, British Prime Minister May is proposing a complicated customs setup that would leave the UK collecting tariffs on behalf of the EU on goods crossing its border. May traveled to Berlin on Thursday for talks with the German Chancellor Merkel as she seeks backing from key European allies for her plan on the future trading relationship she wants with the bloc after leaving the EU/EZ.

GBPUSD Stays Strong

Meanwhile Bank of England Governor Mark Carney said “recent economic data gives confidence that the soft patch in Q1 is largely due to weather and not due to economic climate. The domestic inflationary pressures are gradually building to rates consistent with the target and the headline inflation still expected to rise in short-term because of energy prices. The domestic cost growth has continued to firm broadly as expected, but there are some tentative signs that more hostile and uncertain global trading environment has been dampening activity. The international economic data have been mixed since May meeting, but the tighter monetary policy will be needed”. But Carney also clarified that “the interest rate increase will be limited and gradual over next few years as there is always uncertainty when it comes to Brexit. It will be pretty obvious if the UK is no longer on this Brexit path”. Carney also feels that the Household interest rate expectations of a rate hike seem right, but he will make sure that the BOE/MPC will have enough information (economic data) to make a decision on interest rates in August, even with new ONS schedule of data.

The British Pound hit a dovish snag during yesterday‘s late European trading hours as Germany’s Merkel finds Theresa May’s latest Brexit plan (the 3rd option/Whitepaper) as “unworkable” after her meeting with UK’s Prime Minister Theresa May. Investors have now taken to cautious stance as Cabinet is meeting later today evening to discuss Prime Minister Theresa May’s latest Brexit proposal which is expected to bring both Pro and Anti Brexit members to a mutual agreement. On release front, UK’s market will see Halifax house price index while US market will see Unemployment rate and Non-Farm Payroll data. Expected support and resistance for the pair are at 1.3205 / 1.3162 and 1.3275 / 1.3310 respectively.