GBPUSD Price Forecast – Rangebound Action to Continue Owing to Lack of Directional Bias

The GBPUSD pair yesterday closed on a dovish note, but a look at the intra-day hourly chart shows there hasn’t been much change in price action. Contradicting headlines saw the pair climb towards 1.31 but failed to breach the same resulting in erasure of all gains made early in the day post which the pair traded in consolidative action well near previous session lows. While UK officials comment that trade talks between the EU & UK are heading positive direction, news that lawmakers continue to leave Tory party points to another story. Similarly, European Commission president Jean-Claude Juncker told the press that he is not optimistic on the possibility of UK existing EU with a trade deal. This further weighed on British Pound as Brexit headlines are turning from uncertain conditions to possible no-deal exit scenario.

Dollar Gained on Sino-U.S. Trade Talk Optimism

Further US Dollar continued to gain strength in the broad market despite mixed macro data outcome last night in the U.S.A. as news that Chinese Vice Premier Liu-He visited Washington for high-level trade talks with US President Donald Trump boosted optimism surrounding Sino-U.S. trade talks. This optimism influenced US long term government bond yields to rise by nearly 1% overnight providing US Greenback with fundamental support. As Dollar gained strength while British Pound lacked positive support the pair saw all its gains made yesterday erased during American market hours. However, investors remain cautious and held back from placing major bets as they await Parliament session scheduled to occur near the end of the month for getting an idea of how the UK is going to proceed moving forward and lawmakers stance on further Brexit activities.

This has resulted in pair moving rangebound below mid-1.30 handle ahead of London market hours today. As of writing this article, GBPUSD pair is trading at 1.3039 down by 0.07% on the day. Moving forward, investors await US macro data and headlines pertaining to Sino-U.S. trade talks for meaningful trading opportunities as trading session come to close for the week. On the release front, the UK lacks any major macro data updates while the US market will see a speech from Fed Member Clarida. When looking from a technical perspective, the pair lacks a clear directional bias and needs to decline below 1.3000 on the downside for USD to gain dominance over price action while GBP needs to breach past 1.3050 & 1.3100 handles for GBP to gain upper hand. Given current market conditions, the price action is likely to remain rangebound for rest of the day well near 1.3050 handle as both sides lack decisive factor to make a breakout.

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