|

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

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

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.

More from Valeria Bednarik
Share:

Editor's Picks

EUR/USD trims gains, hovers around 1.1900 post-US data

EUR/USD trades slightly on the back foot around the 1.1900 region in a context dominated by the resurgence of some buying interest around the US Dollar on turnaround Tuesday. Looking at the US docket, Retail Sales disappointed expectations in December, while the ADP 4-Week Average came in at 6.5K.

GBP/USD comes under pressure near 1.3680

The better tone in the Greenback hurts the risk-linked complex on Tuesday, prompting GBP/USD to set aside two consecutive days of gains and trade slightly on the defensive below the 1.3700 mark. Investors, in the meantime, keep their attention on key UK data due later in the week.

Gold loses some traction, still above $5,000

Gold faces some selling pressure on Tuesday, surrendering part of its recent two-day advance although managing to keep the trade above the $5,000 mark per troy ounce. The daily pullback in the precious metal comes in response to the modest rebound in the US Dollar, while declining US Treasury yields across the curve seem to limit the downside.

Bitcoin Cash trades lower, risks dead-cat bounce amid bearish signals

Bitcoin Cash trades in the red below $522 at the time of writing on Tuesday, after multiple rejections at key resistance. BCH’s derivatives and on-chain indicators point to growing bearish sentiment and raise the risk of a dead-cat bounce toward lower support levels.

Dollar drops and stocks rally: The week of reckoning for US economic data

Following a sizeable move lower in US technology Stocks last week, we have witnessed a meaningful recovery unfold. The USD Index is in a concerning position; the monthly price continues to hold the south channel support.

Bitcoin Cash trades lower, risks dead-cat bounce amid bearish signals

Bitcoin Cash (BCH) trades in the red below $522 at the time of writing on Tuesday, after multiple rejections at key resistance. BCH’s derivatives and on-chain indicators point to growing bearish sentiment and raise the risk of a dead-cat bounce toward lower support levels.