GBP/USD Forecast: Only 50-DMA stands in the way for Sterling to fall lower
|- The UK parliament is scheduled to vote on Brexit again today with stalemate set to continue.
- In an effort to get things moving in the House of Commons the UK trade Minister Fox said there is a danger of losing the vote tonight sending a wrong signal to the EU.
- The European Commission said it did not receive any request for Brexit extension saying that normally the extension of Brexit deadline would not be open-ended implying that the European Commission expects the UK to delay Brexit.
- Sterling leaped to 1.2950 on Wednesday, but it was unable to withstand the flash optimism and fell to 1.2820 representing a 50-day moving average ahead of the parliamentary vote.
The GBP/USD is trading little changed on the downside at around 1.2825 ahead of House of Commons parliamentary debate on Brexit. The Bank of England external Monetary Policy Committee member Gertjan Vlieghe is due to speak about the economic outlook and monetary policy at the Resolution Foundation, in London at 9:30 GMT.
Political uncertainty is weighing on Sterling that has been briefly supported on Wednesday after the European Commission said it did not receive any request for Brexit extension saying that normally the extension of Brexit deadline would not be open-ended implying that the European Commission expects the UK to delay Brexit.
The European Council President Donald Tusk tweeted on Wednesday “no news is not always good news” saying the European Union is “still waiting for concrete, realistic proposals from London on how to break” the Brexit impasse.
The GBP/USD briefly jumped about 80 pips to 1.2950 level, but it was not able to sustain above 1.2900 and fell below again as the Brexit uncertainty weighs on the currency pair.
Technically the GBP/USD is moving within a corrective trend after breaking the psychologically important 1.3000 and 38.2% Fibonacci retracement line of 1.2970 last week.
The technical oscillators like the Relative Strength Index (RSI) and Momentum are flat in the neutral territory while Slow Stochastics fell into the Oversold territory. The GBP/USD is sitting at the 1.2820 level representing a 50-DMA on a daily chart with a break below that level targeting 1.2800-1.2750 thereafter. The 1.2883 representing a 100-DMA is resistance on the upside.
GBP/USD daily chart
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