GBP/USD Forecast: Sterling trapped in a downward spiral near a 10-week low
|- The GBP/USD is trading little changed at around 1.2770 after falling to a 10-week low of 1.2756 earlier on Tuesday.
- The Brexit uncertainty weighs on Sterling with the UK Chancellor Phillip Hammond sounding overly optimistic on UK growth failed to lift it off 1.2800.
- The Bank of England is scheduled to release the November Inflation Report this Thursday, but with the Brexit uncertainty weighing, no sign of rate hike is expected to give Sterling a helping hand.
The GBP/USD is trading little changed on the downside at around 1.2770 after falling to a fresh 10-week low and the lowest level since August 20 on Tuesday. The GBP/USD broke below the last two price targets of 1.2920 and 1.2790 as the Brexit uncertainty weighs on currency and now it is heading to a cyclical low and the 2018 low of 1.2662.
Sterling was unmoved by optimism from the UK Chancellor of Exchequer Phillip Hammond who raised the forecast for 2019 UK GDP to 1.6% vs 1.3% in March. Phillip Hammond also said that getting the Brexit deal will mean the end of the era of austerity for the UK. The UK Chancellor Philip Hammond was further quoted saying that a no-deal Brexit would be a shock to the economy and would require fiscal stimulus
The GBP/USD is moving in a downward sloping trend framed by a two-week high of 1.3238 and last week’s high of 1.3091. After falling sharply last week, the GBP/USD remained stagnant on Monday this week just above 1.2800. The UK Chancellor of Exchequers Phillip Hammond lifted the UK GDP forecast but failed to support Sterling that is increasingly under pressure and after breaking 1.2790 it is likely to target the cyclical low and 2018 low of 1.2662.
The technical oscillators including Momentum, the Relative Strength Index both turned lower on a daily chart. The Slow Stochastics is about to make a bullish swing higher in the oversold territory, but the price action lower could as well keep it in the oversold territory for a long time. After the GBP/USD fell past price target of 1.2920 and fell to mid 1.2700s, the next target is 1.2662 representing 2018 low.
GBP/USD daily chart
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