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GBP/USD Price Forecast – Range Bound Action To Continue Across The Day

By:
Colin First
Updated: Feb 5, 2019, 10:00 UTC

GBP to continue range bound action in 1.30 handle as both sides see dovish forecast on key macro data updates for the day.

GBP/USD Price Forecast – Range Bound Action To Continue Across The Day

The GBPUSD pair opened on a neutral note for the week. However, bears had a grip on price action as the return of Brexit Chaos to market caused the pair to decline by over 100 pips from monthly highs as trading session come to close for the week. While upbeat U.S. macro data during American market hours further added to bearish influence and strength of US Dollar in the broad market influenced price action to some extent, Brexit headlines remain as the main driving force for the pair. Moreover, the majority of Asian markets are closed across the week and this has resulted in subdued price action on all major Forex pairs during Asian market hours. Price action the week ahead will purely depend on headlines from England and U.S markets.

Dovish PMI Forecasts Support Continued Consolidative Price Action

While US dollar retained its strength and positive price rally across yesterday’s session in the broad market, GBP managed to recover from bears grip and stage a recovery towards 1.31 handle as news hit the market that “the EU goods to Britain will have fewer customs check in case of “no-deal” Brexit”. While bulls managed to breach 1.3100 handle successfully on the news-driven rally, disappointing UK construction PMI data took the winds out of GBP bulls. Given a clear lack of fundamental support for GBP and spike in 10yr U.S. Treasury bond yields, US dollar managed to drag the pair down below mid 1.30 handle. But prevalent risk appetite in market underpinned British Pound prevent sharp losses. The pair has since maintained consolidative price action near mid 1.30 handle and price held steady in the lower half of 1.30 handle for the majority of Asian market hours.

As of writing this article, GBPUSD pair is trading at 1.3041 up by 0.05% on the day. Moving forward investors are focused on today’s macro data update for short term profit opportunities as the macro calendar has high impact data on both sides of the pair. U.K. calendar sees the release of Services PMI while U.S. investors are focused on today’s macro data update for ISM Non-Manufacturing PMI, Markit Composite, and Services PMI data updates. UK’s Services PMI is forecast to see dovish readings, but an outcome in line with predictions or better than expected readings will have little impact on current consolidative price action as the same has been priced into market action already. A disappointing reading of U.S. PMI’s will help GBP aim for another rally to breach 1.31 handle while reading in line with expectation will see price action continue range bound move well inside 1.30 handle.  Expected support and resistance for the pair are at 1.3030, 1.3000, 1.2955 and 1.3050, 1.3100, 1.3150 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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