GBP/USD Price Forecast – Pound Trades Flat on Brexit WoesBrexit headlines drives price action but cautious investor stance limits major upside move while broad based usd weakness limits sharp downside move.
GBPUSD has managed to recover its losses from last week’s crash completely since trading session opened for the week. While the last four trading sessions saw bullish price action, today’s trading activity has displayed clear signs of bearish influence owing to Brexit uncertainties. News hit market that UK officials are putting out feelers and are on possible lookout for discussion with EU to extend Brexit deadline as per UK Telegraph. However according to a report from Reuters, PM May’s spokesperson has denied any attempts at extending article 50 and has reaffirmed that UK would leave EU as planned on 29 March 2019. Meanwhile another report from Reuters yesterday states that while EU officials are ready to help PM May in her attempts to get the deal approved by UK Parliament, they stand firm on their decision that no changes will be made to Brexit deal approved last month.
Brexit Uncertainty Drives Away Business Worth Billions of Dollar’s From UK
PM May has been pulling all stops and is using any tactics available to her to force UK lawmakers to approve her deal such as pulling out of parliamentary approval when situation looked grave and intentional delay/sabotaging of Brexit parliamentary vote progress. This local political stare down and scenario of medium to long term economic uncertainty has caused billions of dollars’ worth business activities being moved out of UK. While Brexit headlines caused slight dip in British Pound’s price action, broad based greenback’s weakness has helped prevent any sharp fall and the pair has since managed to reclaim loss and is trading flat ahead of London market hours. As of writing this article, GBPUSD pair is trading at 1.2771 down by 0.06% on the day, with strong support above mid 1.27 handle which has been the upper limit of gains in last two weeks.
On release front, UK calendar is scheduled to see two second tier data release today and both have positive forecast which provided some level of positive support to pound bulls. UK market will see release of Halifax House Price Index on MoM/YoY basis, while US market will see release of trade balance data and JOLTs Job Opening data. Broad based US dollar’s weakness on comments from Fed chair is expected to remain prevalent during today’s market hours which will limit downside move but investors caution surrounding Brexit uncertainty in local market and news of North Korean Leader Kim Jong Un’s visit to China are expected to limit any major upside move suggesting possibility of range bound price action for rest of the day. Expected support and resistance for the pair in immediate and near future are at 1.2730, 1.2695, 1.2640 and 1.2789, 1.2815, 1.2855 respectively.