- GBP/USD is under pressure once again after consolidating.
- UK PM May is set to ask for a short Brexit extension rather than a long one.
- The technical picture is slightly less favorable.
GBP/USD is trading in the low 1.3200s, down on the day. UK PM Theresa May is reportedly asking for a short extension to Article 50, delaying Brexit by several months. According to the British media, she will try to pass her Brexit accord in Parliament once again, probably during the extra time.
Markets prefer a longer extension that will not alter the status quo and leave the door open to a second referendum and canceling Brexit altogether. The elections to the EU Parliament complicate matters. Citizens in the old continent will go to the polls on May 26th, but parties register by mid-April. This mid-April deadline will now have implications for Brexit. If the UK does not register to participate in the elections, it is moving towards the exit by the first gathering of the new EP in early July.
An extension is not fully guaranteed. Chief EU Brexit Negotiator Michel Barnier said that the UK must explain why it wants an extension. All 27 EU members need to approve such an extension. This may happen in the EU Summit on Thursday or wait for the last moment. As long as an extension is not approved, Brexit date remains March 29th, which is next Friday.
Brexit developments, news, and rumors are likely to rock the pound throughout the day with short breaks for events that are otherwise of high significance to GBP/USD.
The UK inflation report is set to show stability with headline inflation remaining at 1.8% YoY. There is some risk to the upside. See: UK inflation preview: Why GBP/USD risks are skewed to the upside
And later in the day, the Fed decision could have a more significant impact. The US central bank is set to leave its policy unchanged and add some substance to the pledge to remain patient on interest rates. The new dot-plot will likely be downgraded from the two rate increases the Fed forecast for 2019 back in December 2018.
See:
- Federal Reserve Preview: Dots before our eyes
- Fed Preview: Three scenarios for the crucial dot-plot and four other things to watch
GBP/USD Technical Analysis
Cable is still trading above the 50 and 200 simple Moving Averages on the four-hour chart, but the 50 one is getting closer, approaching 1.3200. Moreover, upside Momentum has all but disappeared, and the Relative Strength Index is pointing down.
While the chart includes several spikes, our technical lines stick to the more stable levels.
1.3200 provided support last week and is also a round number. 1.3110 was a separator of ranges in early March. 1.3070 provided support around the same time. 1.3010 was a swing low last week, and 1.2960 is a solid support line as it is a double-bottom.1.3270 was a high point in early March. 1.3300 is a round number and held GBP/USD down last week. 1.3350 was a high point in late February, and 1.3388 was the cycle high.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD stays below 1.0800 after upbeat US data
EUR/USD stays under bearish pressure and trades slightly below 1.0800 in the American session on Thursday. The data from the US showed that the real GDP growth for the fourth quarter got revised higher to 3.4% from 3.2%, supporting the USD and weighing on the pair.
GBP/USD stays in daily range above 1.2600
GBP/USD fluctuates in a narrow channel above 1.2600 on Thursday. The better-than-expected Initial Jobless Claims data from the US and the upward revision to the Q4 GDP growth helps the USD stay resilient against its rivals and limits the pair's upside.
Gold clings to strong daily gains above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays above 4.2% after upbeat US data and makes it difficult for XAU/USD to preserve its bullish momentum.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
Portfolio rebalancing and reflation trades emerge into Q2
Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.