GBP/USD Forecast: Traders seemed clueless amid the recent Brexit chaos, UK CPI/FOMC eyed for some impetus
|The GBP/USD pair continued with its two-way price action on Tuesday, albeit lacked any firm directional bias and remained within a familiar trading range. The pair did move higher and climbed to levels just above the 1.3300 handle following the release of better than expected UK employment details. Data released on Tuesday showed that the UK unemployment rate unexpectedly dropped to 3.9% and monthly average earnings held steady at 3.4% in January. The uptick, however, lacked any strong follow-through, rather quickly ran out of steam amid the recent Brexit chaos.
After the UK Commons Speaker John Bercow on Monday invoked a rule to forbid PM Theresa May to bring back the same Brexit deal for another meaningful vote, rising risk of a prolonged delay to avoid a hard or no-deal Brexit and mounting concerns about the future of Brexit turned out to be one of the key factors weighing on the British Pound. The UK PM May's spokesman said on Tuesday that the PM would write to EU's Tusk before this week's summit to ask for an extension of the looming Brexit deadline on March 29 and was not prepared to revoke Article 50. Meanwhile, the recent price action clearly seems to suggest that unless we get more clarity on the matter, the pair is likely to remain choppy and continue with its good two-way price swings within a broader trading range.
Today's economic docket, highlighting the release of UK consumer inflation figures seems unlikely to be a major game changer but might still be looked upon for some short-term trading opportunities. The key focus, however, will be on the latest FOMC monetary policy update, wherein the central bank's outlook on interest rates should play an important role in influencing the near-term US Dollar price dynamics and provide some meaningful impetus. This followed by Thursday's BoE meeting might further collaborate towards keeping the GBP traders busy.
From a technical perspective, any meaningful slide might continue to find immediate support near the 1.3200-1.3180 region, which if broken is likely to accelerate the slide towards 1.3150-45 intermediate support before the pair eventually turns vulnerable to break below the 1.3100 handle and test 1.3070 horizontal zone. The last support coincides with a short-term ascending trend-line, constituting towards the formation of a bearish rising wedge chart pattern on the daily chart and hence, should act as a key pivotal point for the pair's near-term trajectory.
On the flip side, the 1.3300-1.3310 region might continue to act as an immediate resistance and is followed by nine-month high swing high, around mid-1.3300s, above which the pair is likely to aim towards reclaiming the 1.3400 round figure mark. The mentioned handle marks the top end of the rising wedge pattern and might keep a lid on the pair's any further near-term positive momentum.
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