GBP/USD Forecast: UK-EU trade negotiations loom

Valeria Bednarik FXStreet

GBP/USD Current Price: 1.2962

UK Markit Manufacturing PMI surprised at 51.9 in February.
The UK and the EU will begin trade talks next March, Brexit back in the spotlight.
GBP/USD bullish potential limited ahead of the critical 1.3000 threshold.

The GBP/USD pair continued to recover on Friday, after bottoming early Thursday at a fresh 2020 low of 1.2848. The pair settled around 1.2960, still down for the week. The Pound found support during London trading hours in the preliminary Markit Manufacturing PMI for February, which came in at 51.9, beating the market’s expectation of 49.7 and above the previous 50. The rally continued as US output, on the contrary, contracted for the first time in over six years. UK data has been resilient as of late, while Brexit-related concerns have been set temporarily aside. The market could start worrying about the future UK-EU relationship in March when negotiations are set to begin.

Meanwhile, the greenback can take advantage of its British counterpart on the back of coronavirus concerns, should news indicate the outbreak expands in the upcoming days. This Monday, the UK is set to release BBA Mortgage Approvals for January, previously at 46,815K.

GBP/USD short-term technical outlook

The GBP/USD pair has a limited bullish potential according to the daily chart, as it finished the week below a bearish 20 DMA and around a mild-bullish 100 DMA. Technical indicators in the mentioned chart have recovered, but remain within negative levels. In the 4-hour chart, the pair is trading above a bearish 20 SMA but below the larger ones, which also maintain their downward slopes. The Momentum indicator remains below its mid-line, losing bullish strength, while the RSI retreats within neutral levels, all of which suggest a limited buying interest near the critical 1.3000 threshold.

Support levels: 1.2915 1.2880 1.2845

Resistance levels: 1.3000 1.3035 1.3070

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.

EUR/USD makes a U-turn, focus on 1.1900

EUR/USD’s recovery picks up further pace, prompting the pair to retarget the key 1.1900 barrier amid further loss of momentum in the US Dollar on Wednesday. Moving forward, investors are expected to remain focused on upcoming labour market figures and the always relevant US CPI prints on Thursday and Friday, respectively.

GBP/USD sticks to the bullish tone near 1.3660

GBP/USD maintains its solid performance on Wednesday, hovering around the 1.3660 zone as the Greenback surrenders its post-NFP bounce. Cable, in the meantime, should now shift its attention to key UK data due on Thursday, including preliminary GDP gauges.

Gold holds on to higher ground ahead of the next catalyst

Gold keeps the bid tone well in place on Wednesday, retargeting the $5,100 zone per troy ounce on the back of modest losses in the US Dollar and despite firm US Treasury yields across the curve. Moving forward, the yellow metal’s next test will come from the release of US CPI figures on Friday.