GBP/USD forecast: Remains vulnerable near 3-month lows amid reviving fears of a no-deal Brexit


Bearish pressure surrounding the British Pound remained unabated amid renewed concerns over a no-deal Brexit, with the GBP/USD pair tumbling to three-month lows on Thursday. The UK government kept saying that cross-party talks are continuing with the opposition Labour party but the fact that there hasn't been any concrete progress in the negotiations and both parties have failed to produce any solution to the current Brexit impasse continued taking its toll on the Sterling. 

The already weaker sentiment deteriorated further after Labour Party's Brexit spokesman Keir Starmer told reporters that his party will vote against the UK PM Theresa May’s Withdrawal Agreement Bill unless there is a deal with the government. It is worth mentioning that after failing to get parliament's approval three times, the government has pledged to bring back the Brexit deal before the parliament for yet another vote in early June. 

On the other hand, the US Dollar picked up the pace in wake of a goodish intraday turnaround in the US Treasury bond yields, which exerted some additional downward pressure on the major. Thursday's upbeat US economic data - Philly Fed Manufacturing Index, the usual initial weekly jobless claims and housing market data remained supportive of the USD bid tone and did little to provide any immediate respite for the GBP bulls.

The pair held on the defensive through the Asian session on Friday and in absence of any major market moving economic releases, the incoming Brexit-related headlines might continue to act as an exclusive driver of the sentiment surrounding the British Pound. Later during the early North-American session, the only scheduled release of May Prelim UoM Consumer Sentiment Index from the US is more likely to be overshadowed by the Brexit-related UK political chaos.

Looking at the technical picture, the pair broke through a descending trend-line support extending from March-April swing lows and is currently placed near its next major support - marked by 61.8% Fibonacci retracement level of the 1.2396-1.3381 up-move. Given that technical indicators are pointing to near-term oversold conditions, bearish traders are likely to take some breather near the mentioned support, which if broken might set the stage for a further decline towards the 1.2700 round figure mark. On the flip side, a sustained recovery back above the 1.2800 handle might prompt some short-covering move but any subsequent up-move now seems more likely to remain capped near the 50% Fibonacci retracement level support break-point, around the 1.2875-80 region.

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.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD: Adds 8 pips in Asia, remains trapped in a bear flag

EUR/USD picked up a bid at 1.1084 at 00:00 GMT and rose to 1.1092 a few minutes before press time. As of writing, the currency pair is trading at 1.1089. The buyers failed to keep the pair above 1.11 for the third straight day on Wednesday.

EUR/USD News

GBP/USD: Struggles between 10/21-DMA amid bullish MACD

Despite reversing from the 21-day simple moving average (DMA), GBP/USD remains above 10-DMA as it trades near 1.2134 during Asian session on Thursday. Supporting the pair’s upside is a bullish signal by 12-bar MACD.

GBP/USD News

USD/JPY: Weaker below 106.50, focus on T-yields ahead of Powell

USD/JPY trades weaker below the 106.50 level, tracking the negative S&P 500 futures and a cautious sentiment on the Asian equities, as attention shifts from the FOMC minutes to the Fed's Powell speech for fresh direction. 

USD/JPY News

The Fed Minutes are Out, but Does It Matter?

The FOMC July 31st Minutes were released earlier today and the collective market seems to think the minutes are less dovish than expected! Gold was volatile right before the release.

Read more

Gold: Trapped in a symmetrical triangle

Gold is trapped in a narrowing price or a symmetrical triangle pattern, according to the 4-hour chart. The yellow metal rose to a six-year high of $1,353 per Oz on Aug. 13 and has charted lower highs and higher lows ever since.

Gold News

Majors

Cryptocurrencies

Signatures