GBP/USD Forecast: PM Johnson leads polls, but BOE weighs more

Valeria Bednarik FXStreet

GBP/USD Current Price: 1.2783

Scottish PM Nicola Sturgeon won’t support PM Johnson in upcoming UK elections.
UK Q3 Gross Domestic Product foreseen recovering, up by 0.3%.
GBP/USD pair at risk of extending its bearish corrective movement.

The GBP/USD pair has fallen sub-1.2800 at the end of the week, wit the Pound still suffering from the echoes of a dovish BOE, as two out of the nine MPC voted for a rate cut. Adding pressure on the UK currency, the Scottish PM, Nicola Sturgeon, launched the SNP campaign for the general election in Edinburgh, making it clear that she will not support Boris Johnson and, at the same time, seek support for an independence referendum for Scotland. Nevertheless, the latest UK election polls published over the weekend indicated that the Conservative Party continues advantaging its rivals.

The UK calendar will be quite busy this Monday, as the kingdom will publish Industrial and Manufacturing Production for September, the Goods Trade Balance for the same month, and more relevant the preliminary estimate of Q3 Gross Domestic Product. The economy is expected to have grown by 0.3% in the three months to September, recovering from -0.2% in the previous quarter.

GBP/USD short-term technical outlook

The decline in the GBP/USD pair remains corrective, as it settled a few pips below the 23.6% retracement of its latest daily run. In the daily chart, however, technical readings suggest that the slide could continue as technical indicators maintain their downward slopes, the Momentum well into negative territory and the RSI at 52, and as the price broke below its 20 DMA. In the 4-hour chart, the 20 SMA heads south below the 100 SMA, both above the current level, while technical indicators consolidate well into negative ground, also indicating a high risk of a downward extension in the upcoming sessions.

Support levels: 1.2750 1.2705 1.2670

Resistance levels: 1.2815 1.2860 1.2900

View Live Chart for the GBP/USD

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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