GBPUSD Price Forecast – Consolidative Action To Continue Ahead of Tomorrow’s Parliament Vote

The pair is consolidative action near Friday’s highs as investors are cautious ahead of tomorrow’s UK parliament vote while Brexit optimism and US dollar’s weakness underpin GBP bulls.
Colin First

GBPUSD pair had a positive close on Friday having hit 3-month highs and managing to 1.32 handle for the first time since mid-October 2018 helped by a number of positive factors. News hit the market on Friday that DUP party has decided to support PM May and vote in favor of Plan B during tomorrow’s parliamentary vote. This combined with broad-based dollar’s weakness owing to increased risk appetite in the broad market and Brexit optimism helped GBP bulls sustain positive price rally. The risk appetite was further boosted in US market hours as news of temporary re-opening of the U.S. government hit the market. But the most positive factor of all was sharp sell-off of US dollar in the broad market on news reports from Wall Street Journal that US Fed is considering to maintaining its current portfolio and ending balance sheet shrinking activities which began 2-years ago.

UK Parliament Vote Eyed For Medium To Long Term Direction Cues

This move is viewed by many a sign that Fed has decided to end its ongoing rate hike cycle and 2019 is unlikely to see any rate hikes which helped GBP bulls see sharp upside move. While the major move is unlikely to occur ahead of tomorrow’s UK parliament session, prevalent risk appetite and Brexit optimism are expected to help GBP bulls maintain its ongoing positive price action. As of writing this article, GBPUSD pair is trading flat at 1.3184 down by 0.13% on the day. The pair has maintained a consolidative price action near Friday’s highs as investors have held back from placing major bets awaiting tomorrow’s UK parliament vote outcome. However, GBP is likely to continue positive price action regardless of outcome as USD is weak in the broad market and investors believe either outcome will help sustain GBP bulls.

Tomorrow’s session is set to vote on PM May’s “Plan B” as well as labor party’s amendment that will take away government’s power to go through with no-deal exit scenario and delay article 50 deadlines in hopes of holding second Brexit referendum. Either of these outcomes will help push GBP back above 1.32 handle and sustain a bullish rally above-mentioned price levels. In case of both proposals failing to be approved during tomorrow’s session, GBP is likely to move down from 3-month highs back near 1.1340 – 1.1325 price range with further declines prevented owing to broad-based US dollar’s weakness. Investors now await a speech from ECB President Mario Draghi & BOE Governor Mark Carney scheduled later in the day for short term profit opportunities. Expected support and resistance for the pair are at 1.3165, 1.3140, 1.3100 and 1.3220, 1.3260, 1.3300 respectively.

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