GBP/USD Price Forecast – GBP/USD Trades Range Bound on Brexit Woes

GBP/USD pair trades positive since trading session opened for the day having recovered from overnight loss but Brexit woes limited the recovery within lower half of 1.27 handle. The pair which started on positive note for the week saw all of its losses from last week’s sharp decline recovered on Monday, however a modest rebound in US Greenback supported by pick up in US Treasury yields dragged the pair into bearish price action. Pound bears found further strength when UK newspaper Telegraph’s reports on UK & EU officials discussing possibility of extending article 50 was denied by PM May’s official spokesperson who said that UK will depart from EU as planned regardless of whether a deal is agreed between the two parties or not. British Pound fell further below mid 1.27 handle and tested intra-day lows of 1.2705 as news hit market that British Government lost a vote that would grant them ability to cut or raise taxes in a ‘no deal’ scenario without the consent of Parliament.

Irish PM Varadkar’s Comments Was GBP’s Saving Grace

However pound bulls found some breathing space on comments from Irish Prime Minister Leo Varadkar who said that EU is ready to provide fresh written guarantees to the U.K. on about Irish backstop process in order to help facilitate PM May in her attempts to get UK parliament to approve her Brexit deal. One of the major reasons UK MP’s fear Irish backstop is owing to possibility that this policy would force Northern Ireland to follow EU rules, however clarifications from EU on said policy should help ease pressure on Brexit deal which is viewed as positive news for British Pound. This news helped the pair rebound from intra-day lows and Pound bulls were further supported by US Dollar’s weakness as Greenback’s recovery fizzled out owing to televised war between Ruling & Opposition party members in U.S amid partial government shutdown which increased U.S. citizen’s irritation over ongoing political issues.

However scenario surrounding Brexit deal approval in UK parliament still remains dire with majority still likely to vote against PM May which has limited the pair’s upside price action. As of writing this article, the pair is trading at 1.2737 up by 0.07% on the day having maintained a consolidative/range bound price action near overnight recovery rally’s highs. On release front, UK doesn’t have any major first tier data scheduled for the day while US calendar is scheduled to see release of latest FOMC meeting minutes which the traders are looking forward to for short term profit opportunities. Investors are also focused on Sino-U.S trade talk related headlines which has extended into an unplanned third day while comments from President Trump on favorable proceedings has stoked investor optimism. Moving forward Brexit headlines will be main driving force of the pair as Parliament deliberation of PM May’s Brexit deal is set to take center stage which is expected to limit any major upsides moves suggesting the pair is likely to continue range bound price action across today’s market hours.