GBP/USD Forecast: Outlook clouded amid prolonged Brexit uncertainties
|The British Pound continued with its good two-way price action on Thursday, albeit the range has been narrowing over the past 24-hours or so. After an initial pull-back from nine-month tops hit on Wednesday, the GBP/USD pair got an intraday boost from unconfirmed news that the DUP is considering to support the government's deal. The pair spiked back above the 1.1300 handle but failed to capitalize on the move, rather met with some aggressive supply at higher levels. The pair held on to its weaker tone and had a rather muted reaction to this week's final key Brexit vote to request a delay of the looming Brexit deadline on March 29.
The UK Parliament voted 412-202 to ask the EU for a delay of the Brexit deadline to June 30 - if a deal is approved by March 20. The proposal also denotes a longer extension if Parliament rejects May's deal for the third time next Wednesday. Meanwhile, the European Council President Donald Tusk has also said that he will push for a longer extension, which would further prolong Brexit uncertainties and eventually keep a lid on any meaningful up-move for the British Pound.
There aren't any major market-moving economic releases due from the UK and hence, any fresh Brexit-related news/developments might continue to act as an exclusive driver of the sentiment surrounding the British Pound. Meanwhile, the US economic docket features the release of Empire state manufacturing index, industrial production and capacity utilization data, which followed by Prelim UoM Consumer Sentiment and JOLTS Job Openings might influence the US Dollar price dynamics and produce some short-term trading opportunities on the last day of the week.
From a technical perspective, the pair now seems to have formed a bearish rising wedge chart pattern on the daily chart and the pattern support coincides with the very important 200-day SMA. However, the 1.3200 handle. Hence, it would be prudent to wait for a convincing break below the mentioned confluence support, near the key 1.30 psychological mark, before confirming that the pair might have already topped out in the near-term and positioning for any further downfall.
In the meantime, the 1.3200 handle might continue to protect the immediate downside, which if broken might drag the pair further towards the 1.3170-60 support area. A follow-through weakness might turn the pair vulnerable to break below the 1.3100 handle and test 1.3065 horizontal support. On the flip side, the 1.3300 round figure mark, followed by the 1.3335 region now seemed to act as immediate resistance levels, above which the pair is likely to aim towards testing the bearish pattern hurdle near the 1.3385 area.
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