- GBP/USD is awaiting a breakthrough in the Brexit deadlock, one way or another as UK lawmakers panic and a majority scramble to try and prevent the UK heading towards no deal Brexit on 12th April.
- GBP/USD is supported by the 200-DMA, resisted by the 50% Fibo ceiling.
- GBP/USD is currently trading at 1.3161 between a range of 1.3120 and 1.3196.
GBP/USD has been consolidating between the top end of the 1.29 handle and the lower end of the 1.33 handle, for the most part, with a brief test of the 50% Fibo of the mid-April highs to flash crash lows at the start of this year.
Of course, there is no trend in sterling, nothing that is sustainable at least, while the currency's fate hangs in the balance of the mayhem happening in UK politics all the while that a majority of UK Parliament attempt to accomplish a soft Brexit solution.
Cooper-Letwin Bill will be voted on at 1900GMT (For 312 against 311 - Yes)
However, the pound is likely to be under the market's scrutiny for a much longer period, as analysts at Rabobank pointed out, "Not only does the threat of a hard Brexit still hang over the outlook for the pound, but so does the risk that UK politics remains messy and divided for some time to come," adding, "Even if a Brexit deal is agreed, negotiations about the future relationship between the UK and EU will persist for the next two years at least. In addition, domestic politics is likely to be fractious."
For the meantime, Brexit headlines will continue to spark off knee-jerk spikes in the pound while otherwise, US data, such as this week's nonfarm payrolls, will be a driver on the dollar side.
Nonfarm payrolls:
Casting minds back, February weakness in employment gains could be put down as a payback for January, with both months impacted by unusually cold weather and the government shutdown. This data will be key and there needs to be a significant improvement in the headline and be closer to the underlying labour-market trend for the dollar to find legs again.
"We forecast non-farm payroll gains of 190,000, and steady unemployment (U-3) and labour participation rates at 3.8% and 63.2%, respectively. We expect AHE to again increase by 3.4% y/y, with slightly lower monthly gains of 0.3% (compared to 0.4% in February)," analysts at Standard Charted argued.
GBP/USD levels
While Brexit drives, it is still worth noting the techncial picture for levels to target. Analysts at Commerzbank have noted that GBP/USD continues to hold over the 200-day ma at 1.2976 which has neutralised their immediate outlook:
"While we would allow for a rebound from the 200-day ma, it should be noted that downside risks are growing and intraday rallies are likely to struggle on rallies to the 1.3163 20 day ma. Below the 200 day ma lies the 1.2929 55 week ma and the double Fibo retracement at 1.2900/1.2895, this is pretty solid support that is expected to hold the downside. This guards the recent low at 1.2772. The market recently reached 1.3382 before failing. Should the 55-week ma hold, our overall target remains the 1.3552 200 week ma."
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