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GBP/USD Price Forecast – GBP/USD Trading Range Bound near 1.2700 Handle Owing to Brexit Concerns

By:
Colin First
Updated: Oct 31, 2018, 06:54 UTC

The Pound is steeply off of recent highs as Brexit concerns pummel investors sentiment.

GBP/USD Midday chart, October 30, 2018

The GBPUSD pair has been on a flat, range bound price movement near 1.2700/1.2715 handle as brexit concerns weigh down investor sentiment. The British Pound continues to lose ground across the board as disappointing economic data for the UK’s domestic economy highlight’s the rising potential for a no-deal Brexit, a proposition that sees Sterling traders heading for the hills as the GBP is down over 4% against the Greenback in three weeks of trading. Today’s price action in GBP will be influenced highly by brexit headlines and US Greenback’s price action in broad market similar to yesterday as macro calendar for UK is very silent today. As of writing this article, the GBPUSD pair is trading near flat at 1.2713 up by 0.06% on the day. US Greenback has been on steady uptrend against global peers across major global counterparts in Asian market hours owing to strong bullish support from better than expected U.S. economic data.

Dollar Index Hits 16-Month high Supported By Upbeat US Macro Data

This is clearly evident from dollar index DXY hitting 16-month high today at 97.06 and US Greenback is expected to continue moving uptrend as U.S. 10-year treasury bond yields rose for third consecutive session and is expected to support Greenback’s bull run in broad market during today’s market hours. The London market session will see investors facing down continued Brexit headlines that showcase the still-vast distance between the two sides of the EU-UK negotiations. The last few rounds of indicators for the UK economy have failed to spark confidence, but the day could see knock-on volatility once again from Europe, with the European Union’s broad CPI preliminary report slated for 10:00 GMT, with the annualized major indicator for October forecast to come in at 1.0% (previous 0.9%), and a missed showing here could further spark risk aversion throughout the broader European market.

When looking from technical perspective, The pair is oversold in the short-term, but there are no signs that the ongoing slump can change course, as in the 4 hours chart, the pair continues developing below a firmly bearish 20 SMA, while technical indicators hold at weekly lows, the RSI currently at 22. Below the mentioned yearly low, the next relevant level and a possible bearish target is 1.2588, June 2017 monthly low. Still unclear, a break below the 1.2500 level should open doors for a continued slump, despite the mentioned oversold conditions. Expected support and resistance price levels for the pair are at 1.2700, 1.2684, 1.2660 and 1.2740, 1.2775, 1.2800 respectively.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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