GBP/USD Price Forecast – GBP/USD Range Bound Near Monthly Lows Ahead of News Filled EU & US Trading SessionsGBPUSD pair is steady near monthly lows ahead of BoE’s Brexit analysis, Carney’s speech
GBP/USD traders see their major pair struggling near 1.2740 after Tuesday’s trading saw the Cable slip from the 1.2800 handle as Brexit concerns rolled over into the next chapter with little fanfare after last weekend’s EU Brexit summit closed on positive and successful note. The current Brexit agreement was unanimously supported by the European Union last weekend, and despite the quiet victory for UK Prime Minister Theresa May, the broader market’s Brexit fears remain unchanged as Sterling investors now await the upcoming House of Commons vote on the current Brexit draft, slated for December 11th. As of writing this article, the GBPUSD pair is trading flat at 1.2750 p by 0.03% on the day. Investors are increasingly anxious ahead of UK’s Parliamentary vote as they are concerned that PM May lacks the support within her own parliament to get the current deal approved due to hardcore Brexiteers within her own Tory party vowing to vote down the proposal, a move that would see the UK heading straight into a no-deal hard-Brexit scenario.
Investors Await BOE’s EU Withdrawal Agreement Report & Fed Chair Powell’s Speech
Comments by the former defense secretary – Michael Fallon, saying that deal as the “worst of all worlds”, further cast doubts on the UK PM Theresa May’s ability to win a parliamentary approval, increase the probability for the UK leaving the EU without a deal. The already stronger greenback, supported by resurfacing US-China trade tensions, got an additional boost and climbed to near two-week tops following some hawkish comments by the Fed Vice Chair Richard Clarida, backing further rate hikes. Investors now await speech by Fed Chair Jerome Powell to affirm his stance on future rate hikes and a hawkish comment would increase bid surrounding US Greenback. On release front, attention now turns to the release of Bank of England’s (BoE) financial stability report (FSR) and stress tests result at 1630 GMT. Alongside, the central bank will also publish its analysis on the EU withdrawal agreement and the release will be followed by BOE Governor Mark Carney’s press conference at 1645 GMT.
The BOE assessment regarding the economy’s ability to weather a hard Brexit might infuse a fresh bout of volatility across the GBP pairs. Later during the early North-American session, the preliminary release (second estimate) of the US Q3 GDP growth figures and new home sales data followed by the Fed Chair Jerome Powell’s scheduled speech will influence the USD price dynamics and further assist market participants to grab some meaning trading opportunities. From a technical perspective, the risk remains tilted to the downside and a sustained weakness below monthly lows, around the 1.2725 horizontal zone, will add credence to the negative outlook. A subsequent breakthrough Oct. lows, around the 1.2700-1.2695 zone, will reaffirm a near-term bearish breakdown and accelerate the slide back towards challenging YTD lows, around the 1.2665-60 region. On the flip side, any recovery attempts beyond the 1.2765-70 horizontal resistance might now confront strong resistance near the 1.2800 handle, which if cleared might trigger a near-term short-covering bounce and lift the pair back towards the 1.2875-80 supply zone.