GBP/USD Forecast: Last attempt to strike a Brexit deal finds a recovering pound


  • The Johnson-Varadkar meeting tops the agenda today.
  • GBP/USD has bounced off the lows amid hopes for a US-Sino trade deal.
  • Thursday's four-hour chart is pointing to further falls for the currency pair.

Can the EU and the UK strike a deal against all the odds? That is the question investors are asking as UK Prime Minister Boris Johnson meets Irish taoiseach Leo Varadkar. Their encounter – at an unknown location – is a last-minute effort to find a Brexit deal in what is described as a make-or-break moment for the talks. 

And it seems that things are already broken. Varadkar said that the UK's insistence that Northern Ireland must leave the EU's customs union regardless of what the province's people want is "of grave difficulty for us." Chief EU Negotiator Michel Barnier said: "We’re not really in a position where we’re able to find an agreement" when addressing the European Parliament on Wednesday. 

In London, the government's position remains that the UK must leave on October 31 – three weeks from today. Andrea Leadsom, the business secretary, suggested that it would be perfectly reasonable for the PM to obey the Benn Act and ask for an extension to Brexit while sending another letter asking the EU to reject it. The opposition fears that her words may turn into policy.

Parliament is currently suspended until the Queen's Speech on Monday, and both parties are gearing up to an emergency debate on Saturday, October 19. Johnson asked for the special sitting – right after the crucial EU Summit on October 17-18 – where he may present a deal. It will also allow MPs to press him to ask the EU to delay Brexit. The day is the deadline for requesting such an extension.

Beyond Brexit

In the meantime, GBP/USD is rising due to the US Dollar's weakness. Hopes for a US-Sino trade deal have pushed the safe-haven Greenback lower. The world's largest economies may agree to control the yuan's movements and refrain from new tariffs. Closely-watched high-level talks are due today. 

US inflation data is also of interest. Core Consumer Price Index is expected to remain unchanged at 2.4%.

See US CPI Preview: Economic growth, not prices is the key

The Federal Reserve's meeting minutes revealed that concerns about low inflation had pushed policymakers toward cutting rates. On the other hand, some members wanted to communicate when the Fed will stop reducting rates. The bank is expected to announce a rate cut later this month, but the split within its ranks continues raging. 

UK data has somewhat disappointed. Gross Domestic Product (GDP) dropped by 0.1% in August, worse than expected. However, it came on top of an upward revision to July's growth rate – to 0.4% from 0.3% initially reported. Mark Carney, Governor of the Bank of England, has said that recent data is consistent with the broader picture of soft growth. 

Overall, headlines from the British-Irish summit and trade talks are set to dominate GBP/USD trading, with short-lived influence from US CPI figures. 

GBP/USD Technical Analysis

GBP USD technical analysis October 10 2019

The technical picture remains bearish despite the recent rise. Momentum on the four-hour chart remains to the downside, and the currency pair remains depressed below the 50, 100, and 200 Simple Moving Averages. 

Initial support awaits at 1.2235, which supported GBP/USD in early September. The 1.22 level provided support in recent days and is a critical cushion. Further down, 1.2155 was a swing low in August, and it is followed by 1.2110. 

Looking up, Wednesday's swing high of 1.2290 is the first line to watch. It is followed by 1.2245, which capped the pair in late September. It is followed by 1.2205, which held it down in early September. October's high of 1.2415 is the next level to watch. 

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. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD rebounds after dismal US PMIs

EUR/USD is trading closer to 1.0850, rising in response to weak US PMIs, with the services one pointing to contraction. Earlier, German Manufacturing PMI beat estimates. 

EUR/USD News

GBP/USD advances to 1.2950 after US data

GBP/USD is trading around 1.2950, taking advantage of US weakness stemming from a downfall in Markit's Services PMI in the US. In Britain, the Manufacturing PMI exceeded estimates. 

GBP/USD News

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Consolidation process underway

The Crypto board continues to be immersed in an emotional leg-breaking, consistently punishing the emotional state of the traders with its continuous changes of direction.

Read more

XAU/USD unstoppable, breaks to fresh 2020 highs, approaching $1650/oz

XAU/USD is trading in an uptrend above its main daily simple moving averages (SMAs) while breaking above a bull channel. Gold is printing fresh 2020 highs hitting $1646.64 per ounce on an intraday basis.  

Gold News

FXStreet launches Real-Time Trading Signals

FXStreet Signals offers access to explanatory live webinars, real-time notifications when signals are triggered and exclusive membership to the company’s Telegram group, where users get direct guidance by our analysts and get room to discuss and interact.

More info

Forex Majors

Cryptocurrencies

Signatures