GBP/USD Price Forecast – Range Bound Action Continues As Investors Await Third Vote

The GBPUSD pair has been trading with a positive bias for the majority of last week as UK parliament’s vote on Brexit related decisions saw a favorable outcome. While the pair hit multi-month highs during last week’s trading session, the pair failed to maintain grip and declined slightly as uncertainties surrounding Brexit capped further upside move and weighed down GBP bulls. However, weak USD owing to declining US Treasury yields and disappointing US macro data helped prevent sharp declines resulting in rangebound action above 1.32 handle across the latter half of the week. Investors now await PM May’s third attempt/vote in UK Parliament to get her deal approved by UK lawmakers ahead of EU council meeting when the members will vote on Britain’s request for the extension of Brexit deadline. The pair opened for the week with a positive bias as the US dollar continues to suffer bearish pressure ahead of upcoming FOMC interest rate decision update.

Third Vote & EU Council Meet In Focus

Investors and traders expect that FOMC will retain its dovish bias even if it keeps interested rates unchanged owing to recent dovish US macro data. Some traders argue that forward guidance may take on even more dovish note and FOMC members may comment on the possibility of rate cuts in the near future if US macro data continues to maintain dovish tone. This has helped GBP bulls maintain a positive bias in the pair’s rangebound action despite uncertainties surrounding Brexit outcome continuing to limit gains. As of writing this article, GBPUSD pair is trading at 1.3260 down by 0.27% on the day. Investors now await UK parliament meeting scheduled on March 20, 2019 for PM May’s third and final attempt at getting her deal approved before EU council decides to vote on article 50 deadline extension request during their meeting on March 21, 2019.

Further, investors are not clear on how long an extension would be granted which is the main cause of uncertainty currently impacting price action. However, investors are sure that the EU is likely to grant the UK an extension as disorderly Brexit would mean a huge loss for both economies. While a longer extension would be positive for GBP that is the case only if the lawmakers move for second Brexit referendum as the EU is not ready to negotiate another trade deal with the UK. The update from the EU meeting would serve as a major trigger for near time price rally with major influence on the directional bias as the outcome could make or break British Pound’s rally in global markets. On the release front, both UK & US lack major macro data updates which could impact price action suggesting that rally is likely to be influenced by headlines driven momentum and broad-based sentiment surrounding British Pound & US Greenback. Expected support and resistance for the pair are at 1.3255, 1.3205, 1.3160 and 1.3310, 1.3350, 1.3395  respectively.

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