GBP/USD Forecast: Ignoring Boris Johnson and bouncing off uptrend support (for now)

GBP/USD has been edging up despite to fears of a no-deal Brexit.
Comments by Boris Johnson and US durable goods orders are eyed later in the day.
Wednesday's four-hour technical chart paints a mixed picture.

Yohay Elam FXStreet

"Do or die" – Boris Johnson's comment on leaving the EU by October 31st has been printed on several UK newspapers. The leading candidate to become PM may have succeeded in moving attention away from his private life – neighbors called the police following a row between Johnson and his girlfriend. However, his commitment to leave even without a deal has been weighing on the pound.

Investment into the UK has already fallen on such fears. Mark Carney, Governor of the Bank of England, has warned that uncertainty is hurting short-term economic performance – and the BOE may cut rates in case of a no-deal Brexit.

Additional comments by Boris Johnson will likely impact the pound. His rival and successor at the foreign office, Jeremy Hunt, has criticized Johnson's commitment to a hard Brexit.

In the US, the dollar has risen after James Bullard, President of the Saint Louis branch of the Federal Reserve, suggested that a regular rate cut of 25 basis points would be enough in July. Markets had already priced in a high chance of a 50bp cut. Fed Chair Jerome Powell has put the emphasis on the upbeat US economy and does not seem keen on a long cycle of rate cuts.

Bullard and Powell helped the US dollar recover, but the effect is fading away.

The Fed decision depends on the data and today's durable goods orders release for May is of high interest. Expectations stand at a recovery after weak figures in April.

See US Durable Goods Orders Preview: Recovery but where is the trend?

GBP/USD Technical Analysis

GBP/USD has been trading above a short-term uptrend support line (thick black line on the chart). The currency pair is battling the 50 Simple Moving Average on the four-hour chart after recapturing the 100 SMA. Momentum and the Relative Strength Index are not pointing to any direction.

All in all, the picture is mixed.

Some resistance awaits at 1.2710 which provided support to the pair earlier this week. It is followed by 1.2765 which was temporarily broken. 1.2815 was a swing high in mid-May, and it is followed by 1.2870 which was April's low.

Below uptrend support, the next line to watch is 1.2660 which is the daily low. It is closely followed by 1.2640 that provided support twice in June. 1.2605 capped GBP/USD in mid-June and served as support beforehand. 1.2558 and 1.2505 are next.

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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