GBP Price Forecast: Pound Undeterred by Brexit Deal
POUND STERLING ANALYSIS & TALKING POINTS
Positivity around Brexit deal doing little for sterling.
BoE and Fed speakers under the spotlight today.
GBP/USD preparing for breakout from key technical levels – falling wedge still in focus.
GBP/USD FUNDAMENTAL BACKDROP
The British pound is trading lower against the US dollar this Thursday as the greenback finds some support. Last night’s Fed officials (Kashkari and Bostic) maintained a hawkish slant to their guidance reiterating the need to fight inflationary pressures and highlighting a tight labor market alongside a robust US economy that is able to withstand an aggressive monetary policy.
From a UK perspective, the Brexit deal made by Prime Minister and the EU. Trade disputes with Northern Ireland have now been resolved but the most surprising aspect of this deal came from the accommodating reception from some senior pro-Brexit individuals who praised the new concessions. Although this is a positive for the UK economy as a whole, the currency remains dictated by central bank policy. The Brexit deal could bring some short-term relief for the pound against the USD but the more relevant data will stem from the US economy and the Federal Reserve.
Recently Bank of England (BoE) Governor Andrew Bailey expressed ambiguous views to allow for flexibility in the coming months without spooking the markets. Later today, both central banks will see statements by their respective speakers (see economic calendar below) while jobless claims data will provide an update on the strong labor market in the US.
Source: DailyFX Economic Calendar
GBP/USD DAILY CHART
Chart prepared by Warren Venketas, IG
Daily GBP/USD price action extends its path within the developing falling wedge chart pattern (black) despite the best efforts of bulls to close atop wedge resistance. Cable is now back below the 1.2000 psychological handle now looking to test the 200-day SMA (blue). An upside break could be seen via weak US economic data that could detract from the hawkish monetary policy stance which remains to be seen.
Key resistance levels:
Key support levels:
BEARISH IG CLIENT SENTIMENT
Written by Warren Venketas for Dailyfx.com
Contact and follow Warrenon Twitter: @WVenketas