GBP/USD Forecast: consolidating, but scale leans towards the downside

Valeria Bednarik FXStreet

The GBP/USD pair trades within a well-limited 50 pips range above the 1.2400 level, ever since the day started, quiet after yesterday's official beginning of the Brexit. UK PM May formally notified the EU its intention to leave the Union, kick starting a two-year negotiation process on how the relationships between both will develop from now. And while the UK wants to focus on a trade-deal, the EU is centered on the UK paying the divorce bill, assuring that the UK won't get any special treatment from now on. Indeed, the split won't have immediate consequences for the Pound, but in the long run, political developments will have large influence on the currency's behavior.

There are no macroeconomic news scheduled in the UK for this Thursday, while the US will release its weekly unemployment claims report and the final revision of the Q4 GDP.

From a technical point of view, the 4 hours chart presents a neutral-to-bearish stance, with the price stuck around the 38.2% retracement of the January rally, and below a bearish 20 SMA, this last around 1.2490, whilst technical indicators head nowhere within negative territory. The pair has an immediate support at 1.2400, the daily low, followed by 1.2370. Below this last the bearish potential will increase with scope then to fall down to 1.2330. Above 1.2450, the pair could extend its gains up to the mentioned 1.2490, but further gains seem unlikely unless US data strongly disappoints.

View live chart of the GBP/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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