GBP/USD Price Forecast – GBP/USD To Trade Range Bound Ahead of PM May’s Meet With EU LeadersPM May’s refusal to submit her Withdrawal Proposal to the UK parliament yesterday will see plenty of Brexit rhetoric in the headlines today amid a highly active macro calendar keeping the pair in volatile but range bound price action.
The pound languished near 20-month lows against the dollar on Tuesday after British Prime Minister Theresa May postponed a crucial vote on her Brexit deal, raising the risk of a chaotic exit from the European Union. The British Pound is trading in a range-bound price action near 1.2580 handle post yesterday’s sharp decline that saw the pair fall from 1.2770 regions fueled by Brexit draft pullback headline.
Moving ahead investors expect today’s London market to the high level of volatile price action driven by high impact data and news based momentum as news of draft pullback is expected to see key members from both sides of Brexit agreement deliver some key comments of future proceedings. As of writing this article, the GBPUSD pair is trading flat at 1.2573 up by 0.08% on the day.
Brexit Woes Continue To Reinforce Bearish Sentiment Surrounding British Pound
With Tuesday’s Brexit deal vote now canceled by PM May, who pulled the proposal off of the table after it became clear that her divorce bill had no hope of passing in the UK parliamentary vote, the focus will now be on what the next steps of Brexit will be as May heads back to Brussels in a bid to secure further concessions from European Union leaders, who have so far given very little middle ground.
While news of Brexit proceedings has inspired a safe haven price action in broad market the downside for GBPUSD pair moving forward is likely to be very low as sentiment surrounding US greenback took a hit in response to reports stating that President Donald Trump is fearing impeachment following Democrats ramping up impeachment process since taking control of house and prosecutors filing a complaint which alleged that Trump committed an impeachable offense by directing Cohen to break the law during the 2016 presidential campaign.
On the release front, UK’s market will see a release of Average index earnings and bonus data, Claimant Count Change data, Employment change, and Unemployment rate data. On the other side of Atlantic, US markets will see release of PPI data and US Agriculture department’s World Agricultural Supply and Demand Estimates Report. When looking from a technical perspective, despite pair turning range-bound price action after sharp overnight falls the negative technical set up surrounding GBP remains intact.
Having spent the second half of the last week struggling with a daily descendant trend line, it finally fell below it, now trading over 100 pips from it. In the 4 hours chart, a bearish 20 SMA converges with the mentioned trend line, as technical indicators maintain their downward slopes around oversold readings, signaling strong selling interest. The next big support, should the 1.2500 figure gets broken, is the 1.2335-30 price zone, where the pair has multiple weekly lows and highs back from 2016 and 2017.