GBP/USD Price Forecast – GBP/USD Maintains a Flat Bearing Ahead of US GDP UpdateThe Sterling to face further losses as the GBP/USD accelerates to the downside.
The pound saw increase in bearish pressure as each trading session passed by this week owing to uncertainties surrounding Brexit talks. The UK brought the talks to a stand-still on 14 October when PM May failed to appease EU leaders with her Brexit plan, which for now means that the EU will not meet with UK in November to discuss Brexit owing to lack of progress on the Irish border conundrum – delaying the a deal between the EU and the UK until the earliest time frame of between 13-14 December at the next scheduled EU summit. As news of same hit market via Bloomberg with headlines “Brexit talks are said to be on hold as May’s team can’t agree”, the pair saw a sharp 30-pip decline which printed a fresh October month low as well as taking the pair below 1.27 handle for first time since 5th September 2018. As of writing this article, the GBPUSD pair is trading near flat at 1.2812 down by 0.03% on the day.
Brexit Updates Continue To Remain Main Driving Force behind British Pound
The GBP/USD is trading into 1.2800 heading into Friday’s London market session after accelerating declines out of a bearish channel yesterday following comments from UK Brexit Secretary Domonic Raab who blamed the European Union for the lack of a Brexit deal. The UK’s Raab blamed the EU’s “intransigence” on Brexit negotiations for the lack of a deal as talk deadlines rapidly approach, and the lack of any workable deals between the UK and the EU is leaving Pound traders in the lurch, forcing the GBP lower across the board as fears of a no-deal hard Brexit continue to rise, with November’s deadline to have a deal in place ahead of March’s final Brexit date fast approaching and the two sides seeming to move further apart after months of endless talking-up by representatives on both sides. On release front, UK’s calendar is silent for the day as there is no schedule for release of major/minor updates. On US markets, the calendar will see release of Core PCE prices, Q3 preliminary GDP data, Michigan consumer expectations and Michigan Consumer Sentiment data updates.
While market is expected to see some increased volatility during release of US GDP update, the data is forecast to print at 3.3% which is well below previous reading of 4.1% and any negative sentiment following such an outcome could provide some breathing space to British pound which has been taking a serious bearish beat down since beginning of the week. The cable has so far maintained a flat tone since late North American market hours yesterday and a look from technical perspective, in 4 hours chart shows that the 20 SMA heads south almost vertically far above the current level, while technical indicators are currently losing downward strength but in extremely oversold levels, with no signs of changing course. Some consolidation could be expected, but the bearish potential will be strong as long as the price remains below the 1.2880 price zone. Expected support and resistance for the pair are at 1.2810, 1.2785, 1.2740 and 1.2850, 1.2880, 1.2925 respectively.