GBP/USD Forecast: At two-month lows on a dual downing, with no hope in sight

GBP/USD is trading below 1.2900, extending its losses.
Brexit uncertainty and USD strength dominate.
The pair is within oversold conditions but a bounce may not be imminent.

Yohay Elam FXStreet

GBP/USD hit a low of 1.2878 at the time of writing, the lowest since mid-February. USD strength remains the primary story in currency markets. The greenback is backed by a nicely-growing economy and a central bank that is not keen to cut interest rates. Other countries in the developed world are lagging behind.

Markets await the all-important first release of US GDP for Q1 due on Friday. And today, we will get a critical hint towards the figure: Durable Goods Orders. The investment data for March feeds into the report on Friday.

See US Durable Goods Preview: Where the consumer leads

In the UK, Brexit talks between the government and the opposition are not going anywhere fast. Some reports suggest the negotiations are on the brink of collapse. Labour blames the Conservatives for rejecting any compromise.

UK PM Theresa May survived an attempt to bring forward a motion of no confidence within her own party. Current party rules shield her from a contest until December, the first anniversary of the previous ousting attempt. Nevertheless, her colleagues urge her to set departure date.

The PM is reportedly considering another vote on her Brexit deal next week, under a new legal framework. At the moment, she is likely to fail in such an attempt that would probably bury the talks with the opposition.

All in all, with no progress on Brexit and a stronger USD, fundamentals point to further downside for the pair.

GBP/USD Technical Analysis

GBP/USD is suffering from downside Momentum and is trading below the 50, 100, and 200 Simple Moving Averages. However, the Relative Strength Index is just below 30, indicating oversold conditions.

Cable is currently battling 1.2895 which provided support in mid-February. 1.2830 is the next line to watch. It provided support in early February. 1.2775 was the swing low that month. 1.2675 was a swing low in January.

1.2960 was the low point in March and served as the first resistance line. 1.3020 was a swing high in recent days. 1.3135 capped GBP/USD in mid-April.

More: GBP/USD looks set for more falls - Confluence Detector

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

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