GBP/USD Price Forecast – GBP/USD To Continue Range Bound Action Ahead of Tomorrow’s VoteFor once brexit uncertainties have played out in favor of British pound.
GBPUSD trades range bound near Friday’s high as Brexit uncertainties continue to remain as main driving force behind the pair’s price action. The British Pound gained momentum last Friday as headlines hit market that UK MP Dominic Grieve who backs calls for another referendum urged Prime Minister May to delay Brexit if her withdrawal deal is rejected by MP’s during Tuesday’s vote. Given high likely hood of PM May’s deal facing rejection and deadlines nearing with each passing day, a no-deal scenario is viewed as disastrous outcome for UK economy. While politicians continue their power play over Brexit deal, no proper counter measures on policies on how to proceed further in case of no-deal scenario has been clearly outlined yet which paints a grave future for the country’s economy.
GBP Rallies Supported By News Driven Momentum
Once the deal vote is done, parliament is likely to move ahead of procedures to begin no-confidence motion on PM May but she is likely to win it as Labor party lacks the number of votes and supporters to oust PM May from her position. Given such an outcome, traders and investors are expecting that PM May could once again pull out her deal, while some believe that vote could end against favor of deal but MP’s will aim to extend article 50 deadline. A No-deal scenario could be disastrous for both parties involved and so EU is willing to offer another olive branch to PM May. Last week saw EU members ready to provide new written clarifications on Irish backstop agreement while this week as trading session opened, news hit market that EU is willing to offer extension of Brexit deadline till July given that the parliamentary vote is likely to reject PM May’s deal.
These offers of multiple olive branches from EU and high possibility of delay in Brexit deadline has provided some level of fundamental support to British Pound pushing it above 7 week highs. As of writing this article, GBPUSD pair is trading at 1.2847 up by 0.05% on the day. On release front, UK calendar has no economic data release for the day while US markets will see release of industrial production data. Despite slight recover in USD last week on profit booking activities and bearish rout in equity markets late in Friday, demand for dollar remains subdued in broad market owing to risk on trading activities and partial shutdown in US government. Prevalent bullish sentiment surrounding GBP is expected to remain high ahead of tomorrow’s key Brexit vote but no major change in price action is expected as investors remain cautious ahead of said event. Expected support and resistance for the pair are at 1.2833, 1.2822, 1.2790 and 1.2865, 1.2936, 1.2995 respectively.