GBP/USD Price Forecast – Sterling Continues To Face Bearish Pressure from Brexit WoesA data-thin calendar for the day will see continued emphasis placed on Brexit headlines, as well as potential broad-market moves following the EU’s GDP reading.
The GBP/USD pair spent most of this first day of the week holding above 1.2800 ending the day marginally lower in the 1.2800 price zone. The Pound bulls took no heed to words of UK’s Chancellor Phillip Hammond during presentation of kingdom’s budget. The budget forecast report was slightly hawkish as Growth forecast was revised slightly higher and the expected deficit was lower and he even mentioned that “the era of austerity is over”, however traders remained concerned about his comments made over the weekend when he mentioned that a no-deal Brexit will need adjustment to this budget which seemed to many investors across the globe that UK is heading for a No-Deal Brexit Scenario. As of writing this article, the GBPUSD pair is trading at 1.2799 up 0.05% on the day and has maintained a range bound price action for majority of Asian market hours.
Lack of Macro Data & Brexit Updates Resulted in Pair Momentum being Influenced By Broad Based USD Sentiment
Tuesday is a data-light day for the Sterling, leaving investors to fret over the lack of momentum on Brexit proceedings, though knock-on volatility could be expected towards the London market session’s midday when Europe sees GDP figures at 10:00 GMT, and a missed reading for the EU’s still-struggling growth figures could see risk appetite take a further swing lower as US Dollar buying remains a popular activity in the broader forex space. Pound bulls are expected to remain on the ropes as headlines surrounding the UK’s departure from the European Union continue to go nowhere, while headlines surrounding Brexit continue to remain as major driving force behind British Pound’s momentum in broad market. The pair is expected to move in a range bound fashion ahead of EZ’s GDP update with slight bearish incline towards the multi-month low of 1.2776 hit last week.
When looking from technical perspective, the Cable remains firmly entrenched on the bearish side of things. The pair remains near the multi-month low of 1.2776 hit last week with intra-day price action indicating a bearish short to medium term outlook. For now, the pair is below a strongly bearish 20 SMA, which capped an early attempt to advance and is currently around 1.2840. The technical indicators turned south as the Momentum accelerated to fresh daily lows and the RSI is currently at 28, in line with further slides ahead particularly on a break below 1.2775. Over on the hourly chart, the positive RSI divergence confirmed on Friday failed to yield a notable corrective rally, which indicates the bearish sentiment is quite strong. Expected support and resistance for the pair are at 1.2775, 1.2740, 1.2700 and 1.2850, 1.2880, 1.2925 respectively.