GBPUSD pair is trading range bound near intra-day highs post yesterday’s headlines driven two way price actions. The pair traded positive in early half yesterday on increased risk appetite but took a dovish dive on comments from DUP’s Brexit spokesman who said that EU’s written clarifications on Irish backstop won’t provide green signal or do much to help in approval of PM May’s deal. The pair recovered losses from European session on dovish comments from various FOMC members which triggered a broad market USD sell off. This was further aggravated by Fed meeting minutes update which revealed that several Fed members wanted to hold interest rate steady during December meet and majority of FOMC members wanted to patiently wait and observe market proceeding and slowdown rate hike cycle which was in line with wide market expectations for a pause or delay in Fed rate hike plans for 2019.
USD Price Dynamics Continues To Drive GBP Bulls amid Lack of Brexit Headlines
The update and headlines in North American market hours resulted in broad market USD sell-off post which Greenback’s demand is subdued in broad market. Amid lack of any major market impacting Brexit headlines which serves as main driving force behind the pair’s price action, broad based USD price dynamics is helping GBP bulls sustains its price action near intra-day high’s. As of writing this article, the GBPUSD pair is trading flat at 1.2774 down by 0.06% on the day. Investors continue to focus on Brexit headlines as debate is underway in UK parliament on much hated Brexit deal brokered by PM May last month. On release front, there is no update in UK market, while US market will see release of Initial Jobless Claims & New home sales data followed by a speech from Fed Chair Jerome Powell. Investors are also focused on ECB meeting minutes scheduled to release later today and details from the update could have some impact on GBP’s price action as well.
As UK market is hit with headlines which suggest multiple possibilities like extension of article 50 and no deal Brexit scenario and possible attempt by PM May to pull out of deal approval in parliament once again, investors are hesitant to place major bets ahead of update from UK House of Commons. Immediate price action for the pair is expected to continue being influenced by broad market USD price dynamics. When looking from technical perspective, the path with least resistance seems to be on downside as 1.28 price handle proves to be a difficult hurdle to crossover and all recent attempts ending in dead cat bounce scenario. On positive headlines the pair could breach 1.28 handle but face resistance near 1.2890 mark on upside while, negative headlines or market updates will see the pair falling back near 1.2750/40 handle post which the decline could continue as low as mid 1.26 handle in immediate future.
This article was originally posted on FX Empire
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