GBP/USD: Recovery capped around 1.3070/75 ahead of UK GDP, Brexit parliament vote
|- Investors remain cautious ahead of data and Brexit parliament vote as uncertainty looms over the UK’s departure from the EU.
- Immediate descending trend-line and 50-day SMA restrict the pair’s nearby upside whereas 200-day SMA becomes the crucial downside support to observe.
The British Pound (GBP) trades near 1.3060 versus the US Dollar (USD) ahead of London open on Friday. The GBP/USD pair recovered during the early-day trading but couldn’t clear 1.3070-75 resistance as investors turn cautious prior to the key events. Not only economic data from the UK and the US but Brexit parliament vote will also entertain investors during the day.
While monthly reading of the UK GfK consumer confidence survey provided initial support to the Cable by posting higher than -14 forecast figure to -13 mark, speculations that the soft Brexit is still on the card helped the quote stretch its recovery afterward. However, investors turned skeptic ahead of the key events like the fourth quarter (Q4) gross domestic product (GDP) and Brexit parliament vote. Not to forget that the US also has some second-tier data like personal income, spending, new home sales and Chicago purchasing managers’ index (PMI) to release.
The US 10-year Treasury bond yield recovers from its 15-month low of 2.35% to 2.40% but is still second lowest during the week.
The UK Q4 2018 GDP is less likely to deviate from 0.2% initial forecast whereas the US personal income and spending could print 0.3% growth for both personal income and spending during the February month. Further, Chicago PMI may soften to 61.0 from 64.7 for March while new home sales bear the market consensus of +0.620 million increase during February versus +0.607 million prior.
In the case of Brexit, the Democratic Unionist Party (DUP) has already signaled that they are going to vote against the British PM Theresa May’s Brexit proposal around 14:30 GMT. Additionally, some of the influential lawmakers like Jacob Rees-Mogg and party rebels are also likely to join the opposition in giving another humiliating defeat to PM May. Though, the market focus may shift to chances of a soft-Brexit considering May’s defeat could help the parliament to request the EU for a year’s extension to the Brexit deadline.
GBP/USD Technical Analysis
While a two-day long descending trend-line is likely the immediate upside barrier for the GBP/USD pair around 1.3070/75, 50-day simple moving average (SMA) level of 1.3090 may act as a comparative strong resistance to disappoint buyers. Should optimists surpass 1.3090, an upward sloping support-turned-resistance-line since January 03, at 1.3110, seem crucial to watch.
Meanwhile, 1.3000 and 200-day SMA level of 1.2980 may try to limit the quote’s nearby declines, a failure to do so can push bears to aim for 100-day SMA level of 1.2925.
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