GBP/USD forecast: Likely to consolidate ahead of the Tory leadership contest results on Tuesday


  • Resurgent USD demand kept a lid on last week’s recovery from multi-month lows.
  • Persistent fears of a no-deal Brexit further held traders from placing any fresh bets.
  • The key focus will remain on the Tory leadership voting results, expected on Tuesday.

The GBP/USD pair failed to capitalize on its recovery move 27-month lows and witnessed some selling on Friday, eroding a part of the previous session's goodish up-move back closer to weekly tops. Despite the fact that the UK Parliament voted in favour of an amendment to ensure that the parliament is not suspended on key dates in October, persistent Brexit-related uncertainties held investors from placing any aggressive bullish bets on the last trading day of the week.

This coupled with resurgent US Dollar demand, supported by St. Louis Fed President James Bullard's comments further collaborated to the pair's intraday slide. Bullard on Friday partly ruled out the possibilities of 50 bps rate cut at the July meeting and said that the current US economic condition doesn't warrant a larger cut. This came after the New York Fed President John William’s walked back on his dovish remarks on Thursday and prompted some USD short-covering move.

The pair opened with a modest bearish gap at the start of a new trading week, albeit now seemed to show some resilience below the key 1.2500 psychological mark. Investors still seemed reluctant to place any aggressive bets ahead of the Tory leadership voting results, expected to be announced sometime on Tuesday. Boris Johnson remains the frontrunner and has shown readiness to leave the EU on October 31, even without a deal. This should keep a lid on any meaningful up-move and possibly lead to a subdued/range-bound price action amid absent relevant market-moving economic releases either from the UK or the US.

From a technical perspective, the pair still needs to make it through the 1.2560-70 region to increase prospects for any further near-term recovery beyond the 1.2600 handle towards its next major hurdle near the 1.2665-70 supply zone. On the flip side, the 1.2475-65 region now seems to have emerged as an immediate support, which if broken might turn the pair vulnerable to accelerate the slide back towards challenging the 1.2400 round figure mark. Any subsequent slide might continue to attract some buying interest near a support marked by the lower end of a four-month-old descending trend-channel and help limit deeper losses.

fxsoriginal

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

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!


Latest Forex Analysis

Editors’ Picks

EUR/USD eyes first monthly gain of 2020

EUR/USD is on track to post the first monthly gain of 2020. Technical breakout and EU fiscal hopes could push EUR/USD above 1.11 on Friday. On the data front, the focus will be on Eurozone CPI.

EUR/USD News

GBP/USD: Mildly bid above 1.2300 as UK enters Sino-American rivalry

GBP/USD probes intraday high after bouncing off lows near 1.2300. UK increases changes for China’s Huawei, offers citizenship to Hong Kong residents. EU’s Trade Chief says UK may have given up on Brexit deal. US President Trump’s presser will be key.

GBP/USD News

Cardano explodes over 1% in minutes, is $0.07 achievable on Friday?

Cardano is among the most active cryptocurrencies in the market this week. ADA/USD is exchanging hands at $0.0666 amid a battle to beat Thursday highs at $0.0680. On the other hand, the price has not been left behind especially after spiking by over 1% in a matter of minutes.

Read more

Gold pokes $1,721/23 resistance area

Gold prices extend the latest recovery from $1,711 as DXY refreshes two-month low. A confluence of 10-day EMA, nine-day-old falling trend line probes immediate upside. An ascending trend line from April 21 favors the bulls.

Gold News

WTI eyes record monthly surge

While West Texas Intermediate (WTI) crude's front-month contract has backed off from the 2.5-month highs reached earlier this week due to deteriorating US-China tensions, it is still on track to post its biggest monthly gain on record. 

Oil News

Forex Majors

Cryptocurrencies

Signatures