GBP/USD struggles to extend the recovery before UK PM May reaches Dublin
- The GBP/USD refrains from extending prior gains and struggles around 1.2950 on early Friday.
- Chances of a soft Brexit grew after the EU agrees for renegotiating earlier deal by the February end if the UK resolves the Irish border issue.
- UK PM Theresa May travels Ireland to convince Dublin leaders for an alternative to the backstop.
GBP/USD remains mostly unchanged near 1.2950 during early Friday before the UK Prime Minister Theresa May reaches Dublin to meet her Irish counterpart and discuss the problematic border plan. The pair recovered post-BoE losses on Thursday due to soft Brexit hopes.
The GBP/USD pair, mostly known as the Cable dropped to the day’s low after the Bank of England (BoE) downgraded growth forecasts for the year 2019/20 in its quarterly inflation report (QIR) published Thursday. The BoE Governor, Mark Carney, also pushed the May month rate lift expectations off the table by emphasizing Brexit uncertainty.
Following its dip to the day’s low Cable surged towards marking a Thursday’s high as news from May’s visit to the European Union (EU) leaders raised hopes that the Brexit negotiation will re-open by the end of February and the March 29 deadline may be delayed, which in turn could give soft departure of the UK from the EU region.
Having witnessed readiness on the part of the EU to put the Brexit deals again on the table, the Tory leader will fly for Ireland with her attorney general Geoffrey Cox on Friday. Both the British representatives will surely try hard to convince Irish politicians to support EU demands of an alternative to the backstop. Many politicians at home are discussing possible actions, including technological advancements, to come up with a solution that can fasten the northern Ireland goods travel through Ireland to the UK.
On the other hand, Reuters published news from the Sun that claims Theresa May is trying to convince a number of opposition party members of parliament to support her Brexit motion when it appears for a vote during mid-February.
While the recent news has less credibility to fuel the GBP upwards, any positive developments on the Ireland discussion between the May and her Irish counterpart, Leo Varadkar, can help the Cable extend its recent recovery.
GBP/USD Technical Analysis
Immediate descending trend-line limits the GBP/USD pair’s upside around 1.2980, breaking which 1.3030 and 1.3110 may gain buyers’ attention.
On the contrary, 1.2830 and 1.2810 can be considered as near-term supports after the break of 1.2915 and 1.2850 levels.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
