GBP/USD Forecast: Brexit headlines continue to dent sentiment, remains vulnerable
|The British Pound did get a minor lift on Thursday following the release of Brexit white paper, which had led to resignations of high profile UK ministers, including David Davis and Boris Johnson. This coupled with softer US monthly CPI print provided an additional boost and lifted the GBP/USD pair to an intraday high level of 1.3245. The uptick, however, lacked any strong follow-through and was further capped by an upbeat comment on the US economic outlook by the Fed Chair Jerome Powell.
Brexit headlines continue to influence sentiment surrounding the Sterling, with the US President Donald Trump's latest comments, favouring a hard Brexit scenario, prompting some fresh selling during the Asian session on Friday. Trump said the UK PM Theresa May's new soft-Brexit plan for a business-friendly Brexit will leave it too close to the EU and probably kill prospects of any new deal with the US.
The pair retreated farther below the 1.3200 handle and hit a fresh 1-1/2 week low. There isn't any major market-moving economic data due for release on Friday and hence, traders might look upon the BoE MPC Member Jon Cunliffe's scheduled speech in order to grab some short-term opportunities.
From a technical perspective, the pair has been trending lower alongside a short-term descending trend-channel, with 1.3165 area acting as immediate support. A convincing break below the mentioned support might turn the pair vulnerable to head back towards resting sub-1.3100 level before eventually dropping to test the key 1.30 psychological mark.
Meanwhile, on the upside, any meaningful recovery attempts beyond the 1.3200 handle might continue to confront stiff resistance near the 1.3245 region, also coinciding with the trend-channel hurdle, which if cleared might negate the bearish formation and prompt a near-term short-covering move.
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