GBP/USD Forecast: Looking for a new direction as May may be looking for a new job

GBP/USD kicks off the week slightly lower as Brexit uncertainty looms.
Contradicting reports about the next Brexit steps and May's future are set to move the pound
The technical picture is decidedly mixed for the pair.

Yohay Elam FXStreet

GBP/USD is slipping off the 1.3200 level after recovering on Friday. Brexit remains left, right, and center, but also concerns about the global economy weigh.

The state of Brexit

After the EU Summit resulted in a delay of Brexit at least until April 12th, UK PM Theresa May is scrambling to muster support for her deal, as usual. The British media reports that May has offered to resign in return for support. Others say this is a condition laid out by her opponents, and other stories suggest there is an attempt to oust her and nominate an "interim PM" such as her deputy, David Lidington.

The meets in the morning and news from that meeting may impact the pound. Parliament will later try to take control. Several MPs from all parties will attempt to reserve Wednesday as a day of debate for alternative Brexit options. The initiative led by Oliver Letwin, Yvette Cooper, and others, will allow lawmakers a series of "indicative votes" on the path forward.

One of the options is going for a softer Brexit, perhaps by adopting the Norwegian Model. Norway is not a member of the EU but pays into the EU budget, allows free movement and enjoys the full benefits of both the Single Market and the Customs Union.

A second-referendum is another option. Around one million people took to the streets of London on Saturday, demanding a fresh vote. Also, a petition calling to revoke Article 50 has surpassed five million signatures, obliging the House of Commons to consider a debate.

The vote on whether Parliament will hold indicative votes on Wednesday is due around 22:00 GMT.

Statements, news reports, leaks, and rumors are set to move the pound.

More: 3 scenarios for the ultimate Brexit end-game

Global fears intensify

Following the Fed's second dovish twist last week and the apparent downturn in Germany, markets fear a worse global slowdown. The US 10-year to 3-month bond yield spread turned negative, signaling a recession in the world's largest economy. Markets closed lower on Friday, and the slump extends to today. The risk-off mood favors the US Dollar and the Japanese Yen over other currencies.

FOMC member Charles Evans said inflation remains low and there is no need to raise rates. He also opened the door to cutting rates.

GBP/USD Technical Analysis

GBP/USD is suffering from a bit of downside Momentum on the four-hour chart, but the Relative Strength Index is fairly balanced around 50. And while the pair trades below the 50 Simple Moving Average, it is well above the 200 SMA.

All in all, the technical picture is mixed.

Support awaits at 1.3100 which is where the 200 SMA meets the chart. The round number was a support line in early March. Further down, 1.3005 was the low point last week and also provided support earlier in the month. 1.2960 is another double-bottom, followed by 1.2895 which cushioned the pair in mid-February.

Looking up, 1.3225 was a high point early in the day, and it is also where the 50 SMA meets the chart. Far above, 1.3315 was a swing high last week and 1.3388 is the cycle high.

Volatility is set to remain high.

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

GBP/USD bounces off lows, back above 1.3200

After bottoming out near 1.3160, GBP/USD manages to regain a bit of shine and reclaim the 1.3200 mark and beyond at the end of the week. Stronger-than-expected UK Retail Sales data seem to be helping the British Pound limit its losses, while the chaotic UK political environment keeps the bulls at bay for now.

EUR/USD looks consolidative around 1.1460

EUR/USD stages a modest rebound after slipping to a three-month low below 1.1420 at the end of the week. That said, the pair now looks to consolidate humble gains just above 1.1460 despite growing uncertainty surrounding the next round of US-Iran negotiations, which keeps the US Dollar’s downside contained.

Gold slips back to six-day lows, targets $4,100

Gold retreats for the third consecutive day on Friday, eroding gains seen in the first half of the week and approaching the key $4,100 mark per troy ounce. Indeed, the precious metal continues to face headwinds from the Fed's hawkish stance and renewed uncertainty surrounding the next round of US-Iran negotiations.

Breaking: Iran closes the Strait of Hormuz amid ceasefire deal violation

Iran says it is closing the Strait of Hormuz after accusing the United States (US) and Israel of violating the ceasefire. According to Iran, the decision came over the continued Israeli strikes in Lebanon. The Iranian Revolutionary Guard Corps Navy issued a warning to all vessels: "Do not approach the Strait of Hormuz; otherwise, your security will be jeopardized."

The Iran war didn't break the US economy, but what happens next?

Nearly four months after the start of the Iran war, the US economy remains remarkably resilient. While the conflict initially triggered a severe disruption to global energy markets and a sharp rise in Oil prices, recent diplomatic progress between Washington and Tehran has eased concerns about a prolonged supply shock.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.