GBP/USD Forecast: Unconvinced by three efforts to block a hard Brexit – more falls possible


  • GBP/USD has been consolidating below 1.2100 amid efforts to block a no-deal Brexit. 
  • Trump's trade reprieve and UK inflation are also eyed.
  • Wednesday's four-hour chart points to further downside.

"Do or die" – Boris Johnson's words on leaving the EU by October 31st – and now the pro-Remain camp has begun fighting in earnest.

A group of MPs has lodged a court case meant to prevent prime minister Johnson to bypass parliament to force a no-deal Brexit. A judge has set the hearing for September 6th – three days after parliament returns from the summer break.

A second development comes from House of Commons Speaker John Bercow. The colorful character has vowed to "fight with every breath" to stop Johnson from closing parliament. 

And the third move comes from former Chancellor of the Exchequer Phillip Hammond – that has raised his rhetoric by saying that a no-deal Brexit would be a "betrayal of the referendum result." The senior politician and 20 MPs have sent a letter to the PM and said they are alarmed by his red lines which "appear to eliminate the chances of reaching an agreement with the EU."

The pound has been unimpressed by these efforts as the clock ticks down to Brexit – 78 days to go. 

Sterling did receive a short-lived boost from rising inflation. The Consumer Price Index rose by 2.1% YoY in July – above expectations for a drop from 2% to 1.9%. The uptick raises the chances for a rate hike by the Bank of England – assuming a smooth Brexit.

The rise in inflation is eroding some of the gains in salaries. On Tuesday we learned that wage growth has accelerated to 3.7% year on year and 3.9% excluding bonuses – the latter figure beating expectations. Overall, the UK job market remains healthy. While the unemployment rate has risen from 3.8% to 3.9% in June, it remains low.

On the other side of the pond, the US dollar received a boost from a reprieve in trade wars. President Donald Trump decided to delay imposing tariffs on some Chinese products from September 1st to December 15th – a relief for shoppers. The U-turn has been received positively by markets and lowered the chances of a rate cut by the Fed.

Moreover, the world's largest economies confirmed they will hold face-to-face trade talks in September. Further tweets from Trump and comments from Beijing may move markets.

Overall, politics are set to dominate trading once again.

GBP/USD Technical Analysis 

GBP USD technical analysis August 14 2019

GBP/USD has been trading in a downtrend channel since early August when it hit a high of 1.2250, marking the beginning of the downtrend resistance line. The pair has since hit a low of 1.2015 which defined the downtrend support line. 

Cable continues trading below the 50, 100, and 200 Simple Moving Averages and suffers from downtrend momentum – bearish signs.

Some support awaits at 1.2040 which has been a low point in recent days. The 2019 low of 1.2015 is next, and it is closely followed by the round number of 1.2000 and the 2017 low of 1.1985.

Looking up, resistance awaits at 1.2100, which has held the pound down this week and provided support last week. 1.2155 was a high point on Friday, 1.2210 capped last week, and 1.2250 is the post-crash 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.

Analysis feed

Latest Forex Analysis

Editors’ Picks

GBP/USD extends gains toward 1.31 after upbeat UK wage figures

GBP/USD is extending its gains and advancing toward 1.31 after UK wage figures beat expectations with 3.2% annually. The unemployment rate remained at 3.8% in November. 

GBP/USD News

EUR/USD recaptures 1.11 amid upbeat German figures, USD weakness

EUR/USD is trading above 1.11 after the German ZEW Economic Sentiment beat with 26.7 points. Presidents Trump and Macron agreed not to slap tariffs on each others' countries. The US dollar is retreating.

EUR/USD News

Market delays the trip to the moon

The crypto markets continue to turn to a new bullish phase. This turnaround began at the beginning of the year after a consolidation phase that started in mid-2019. 

Read more

Gold retreats from 2-week tops, drifts into negative territory

Gold failed to capitalize on its early uptick to near two-week tops and dropped to fresh session lows, around the $1560 region in the last hour.

Gold News

USD/JPY: Weaker near 110.00 amid China virus fears, BOJ's status-quo

The Japanese yen retains the bid tone following the Bank of Japan's (BOJ) status-quo, keeping USD/JPY under pressure near the 110 level amid risk-off market profile. S&P 500 futures drop 0.40% while the US Treasury yields are down over 1.50%, as the sentiment is hit by the coronavirus outbreak. 

USD/JPY News

Forex Majors

Cryptocurrencies

Signatures