GBPUSD Price Forecast – GBP Declines from Multi-Month Highs as Traders Lose Faith on UK lawmakers

The GBPUSD pair opened on a subdued note yesterday following news of PM May’s deal being rejected in UK parliament. But weak USD and hopes for UK parliament voting against no-deal Brexit scenario underpinned the market bulls resulting in steady upside price action across the day. The outcome of UK parliament met with investors expectations pushing the pair well above mid-1.33 handle hitting new nine-month highs as UK lawmakers voted against the no-deal Brexit scenario. But the pair fell sharp during Pacific-Asian market hours as investors lost hope on lawmakers to resolve ongoing Brexit woes. While UK parliament is set to vote on the extension of article 50 extension today, the same was on the table for working with PM May’s last-minute modified deal based on the legally binding assurance from EU’s Juncker.

Hopes For Deadline Extension Underpins GBP Bulls

But now that UK lawmakers have rejected her deal and EU has made clear that no further negotiations will be made on trade deal as they will only accept deal previously agreed upon with PM May, the lawmakers have little options left to work with even in case of an extended deadline. EU spokesperson has mentioned that they are ready for both outcomes be it an exit with or without the deal. The best option to move forward is to invoke a second Brexit referendum and move forward with reversing the decision to leave EU. UK lawmakers have shown no signs of invoking steps for same during today’s parliament session and even if an extension of the deadline is granted, traders don’t believe the UK could make much progress given their actions from recent past. This facto continues to hinder upside keeping the pair limited below 1.3400 handle in immediate and near future trading sessions. As of writing this article, GBPUSD pair is trading at 1.3305 down by 0.24% on the day.

While it seems impossible for lawmakers to come up with a new deal or avoid Brexit altogether even if the UK manages to get an extension for deadline by 2 or 3 months, it will give lawmakers time to resolve messy situation and prepare business / citizens and government to face to fallout that would come along with no-deal exit scenario. This has helped GBP bulls find some support and led to consolidative price action above 1.33 handle in late-Asian and early-European market hours. Aside from the UK parliament vote, investors are also focused on macro data updates for short term profit opportunities. On the release front today, UK calendar remains silent for the day while US calendar will see the release of import and export price index and new home sales data. When looking from a technical perspective, the path with least resistance is towards upside given investor optimism for deadline extension ahead of parliament meeting. Expected support and resistance for the pair are at 1.3290, 1.3250, 1.3220 and 1.3325, 1.3350, 1.3380 respectively.

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