GBP/USD Forecast: Getting mixed clues from Brexit, negative rates

Valeria Bednarik FXStreet

GBP/USD Current price: 1.2864

BOE’s Governor Bailey said that the central bank has “not ruled out” using negative rates.
Brexit trade talks resumed this Tuesday, although there are no official news on it.
GBP/USD is consolidating near the upper end of its latest range.

The GBP/USD pair has held at the higher end of its latest range, with a limited bullish potential. Hopes for a Brexit trade deal maintained the Pound afloat, as representatives from the EU and the EU have said that a trade deal is still possible. Still, no progress has been officially reported. The UK currency suffered a setback with BOE Governor Bailey’s comments, as he said that the central bank is not out of ammunition when it comes to additional QE. He also said that policymakers have “not ruled out using negative interest rates but are realistic about challenges from banking retail deposits.”

Meanwhile, the UK reported over 7,000 new coronavirus cases in the last 24 hours, the highest daily increase since the pandemic took its toll in the kingdom. New restrictive measures have come into force this weekend in some parts of England. This Thursday, the UK will publish the final version of Q2 GDP, foreseen as previously estimated at -20.4%. Business investment in the same period is seen down 31.4%, also matching the preliminary estimate.

GBP/USD short-term technical outlook

The GBP/USD pair is heading into the new day hovering around 1.2860, neutral-to-bearish according to intraday technical readings. The 4-hour chart shows that bulls are still unable to push the price beyond a bearish 100 SMA, currently at around 1.1870, although the 20 SMA keeps advancing below the current level. Technical indicators in the mentioned time-frame have lost directional strength, but remain within negative levels, indicating limited demand for the greenback.

Support levels: 1.2820 1.2770 1.2715

Resistance levels: 1.2900 1.2940 1.2990

View Live Chart for the GBP/USD

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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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