GBP/USD Forecast: Bulls pressuring 200-day SMA as chances of a no-deal Brexit gets slimmer


The British Pound turned out to be the best performing major currency on Wednesday, assisting the GBP/USD pair to decisively breakthrough the key 1.3000 psychological threshold and climb to its highest level since Nov. 8 amid growing market expectations of an extension of article 50 and receding risk of a no-deal Brexit. Ahead of next week’s vote on the UK PM Theresa May’s Brexit Plan B, a campaign to block no-deal Brexit gathers momentum on reports that the UK Labour Party will back an amendment, aimed at forcing a parliamentary vote on delaying Brexit if a deal isn't passed by Feb. 26. 

An extension of Article 50 was seen as increasing chances of parliament to push for a second referendum and continued providing a strong boost to the Sterling. The pair rallied nearly 140-pips intraday to test the very important 200-day SMA for the first time since mid-May 2018 and was further supported by some renewed US Dollar selling pressure. Against the backdrop of unresolved US-China trade dispute, concerns over the US government shutdown and a sharp drop in the US 10-year Treasury bond yield exerted some fresh downward pressure on the greenback and kept pushing the pair higher through the US trading session.

The pair now seems to have entered a bullish consolidation phase and was seen oscillating in a narrow trading band, just south of the 1.3100 handle. There isn't any market-moving economic data due for release, either from the UK or the US, and hence, the incoming Brexit-related headlines might continue to influence sentiment surrounding the British Pound and infuse volatility around the GBP crosses.

Looking at the technical picture, the overnight upsurge confirmed a near-term bullish breakthrough a four-month-old descending trend-line. A sustained move beyond the 1.3075-80 region (200-DMA) will further reinforce the constructive outlook and lift the pair further beyond the 1.3100 handle, towards a resistance marked by 38.2% Fibonacci retracement level of the 1.4377-1.2396 downfall, around the 1.3145-50 zone.

On the flip side, the 1.3030-25 region, closely followed by the 1.30 handle now seems to protect the immediate downside. Any subsequent slide might now be seen as a buying opportunity and hence, is likely to be limited by the descending trend-line resistance break-point, now turned support, currently near the 1.2960 area.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD maintains the red, bears eye 1.1106

The positive momentum of the American currency leads the way among currencies. EUR/USD extends slide below 1.1180 with little in the way toward the yearly low at 1.1106. EU Consumer Confidence and US housing data pending of release.

EUR/USD News

GBP/USD gives up intraday gains, back below 1.2450

The modest advance triggered by Boris Johnson’s victory has been already reversed, as the dollar rules. GBP/USD slowly but steadily approaching to its daily low at 1.2417, as UK data released earlier in the day disappointed.

GBP/USD News

USD/JPY: Greenback gaining ground against Yen above the 108.00 handle

USD/JPY is bouncing from the monthly lows as buyers broke above the 108.00 figure. The levels to beat for bulls are seen at 108.27 and the 108.41 resistances.

USD/JPY News

Bitcoin fades and gives the lead to Altcoins

ETH/BTC is set up to rise in the short term. XRP can surprise and open up the Altcoin season. Bitcoin goes low and tests important levels.

Read more

Gold: Rebounds from $1414 area, retests overnight swing high

With technical indicators on hourly charts recovering from the negative territory, a follow-through buying beyond the current congestion zone might now set the stage for a further intraday appreciating move.

Gold News

Majors

Cryptocurrencies

Signatures