GBP/USD Price Forecast – GBP/USD Range Bound Above Mid 1.25 Handle As Brexit Bears Cap Upside Move

GBP/USD heads into the new trading week on upper half of 1.25 handle trading in range bound fashion following Friday’s two way move which saw the pair fall sharp below 1.26 handle and test lower end of 1.25 handle. The pair was pressured by Brexit woes and bearish equity market performance which influenced investors to flock to safe haven instrument US Greenback but a mixed macro data outcome in US economic calendar put a dent in US fed rate hike forward guidance for 2019 resulting in pair’s rebound above mid 1.25 handle. The pair has since followed through with the rebound and is trading flat ahead of London market hours as the pair continues to remain pressured by Brexit woes and broad based demand for US Greenback. The short to medium term outlook for British Pound remains bearish as the UK barrels into a messy Brexit showdown in March. As of writing this article, GBPUSD pair is trading flat at 1.2585 up by 0.01% on the day.

Lack of Major Macro Data Release Leaves Pair at Mercy of Brexit Headlines

UK Prime Minister Theresa May finds herself back at square one after a couple of weeks of intense distractions. While PM May has survived her own party’s no-confidence vote the draft for Brexit deal is yet to be approved by parliament and continues to look guaranteed to die on the floor of the UK’s House of Commons. Meanwhile EU has also commented that they stand firm in their position that no further negotiations for concessions or further discussions in general surrounding Brexit will be made from their end leaving PM May to get the deal approved or lead UK into a no-deal Brexit scenario. May’s camp is looking to wind down the clock on Brexit further in hopes to corral further support from the UK’s parliament, hoping that a lack of time before next March’s deadline will see the UK’s naysayers more agreeable.

The economic calendar is free and clear of UK data for the day and with little meaningful data to come from US market session, the pair’s price action is left at the mercy of Brexit headlines ahead of this week’s key event US FOMC rate hike statement. When looking from technical perspective, last week’s goodish rebound from 20-month lows faced rejection at 100-hour SMA and the price action clearly points to persistent selling bias at higher levels hinting that near term bearish trajectory is far from over. A follow-through weakness back below the key 1.2500 psychological mark will reaffirm the negative outlook and turn the pair vulnerable to resume with its prior/well-established bearish trend towards challenging the 1.2400 round figure mark. On a flip side, any meaningful recovery beyond the 1.2600 handle might continue to confront some fresh supply at 100-hour SMA, currently near mid-1.2600s, above which a fresh bout of short-covering could lift the pair further towards reclaiming the 1.2700 mark.