GBP/USD Price Forecast – GBP/USD Holds Fort at 1.34 Ahead of FOMC Meet

The GBP/USD is still trading near 1.3430 after failing to generate bullish momentum last week, and has been capped by the major handle as markets await further Brexit developments this week. With an FOMC rate hike expected this coming week, the interest rate differential between the GBP and the USD is expected to diverge further, which could hamper the Sterling out of the gate, sending the Pound back into recent lows. After the latest Irish border solution being rejected, traders are looking for further headlines this week as the UK continues to grapple with finding common middle ground between hard-line Brexiteers and the EU leadership in Brussels, with Prime Minister Theresa May caught in the middle and struggling to find solutions that appease both sides.

GBPUSD Continues to Chop Around

The week ahead looks extremely busy for British Pound as Four out of Five trading sessions this week have high impact update in British calendar which could help provide high level of volatility for traders. Monday brings a slew of data for the UK, all dropping at 08:30 GMT, but eyes will be focused on the Manufacturing Industrial Production figures, with the year-on-year headline expected to come in steady with the previous reading, at 2.9%. The US Monday session will be smooth sailing on the economic calendar, but traders will likely be processing the G7 summit blowout that saw President Donald Trump abandon the summit a day early and withdraw the US’ support of the G7 communiqué after a Tweet tirade from the POTUS aboard Air Force One en route to Singapore for the upcoming Trump-Kim summit.

This week also sees Average Earnings Index +Bonus (Apr), Claimant Count Change (May), Core CPI & PPI input and Core retail sales data in next three consecutive trading sessions. The daily chart sees GBP/USD correcting higher from 1.3205 low with technical oscillators pointing in different directions. While the Relative Strength Index leaped off the oversold territory and turned again with Sterling moving down the levels from the beginning of last week, Slow Stochastic is still in the upward trajectory. The death star crossover of the 50-day and 100-day moving average on the daily chart indicates further downside potential for GBP/USD first attempting to break 1.3300 before attacking 1.3200. On the upside the GBP/USD needs to break back above 1.3380 to target 1.3450, last week’s high.