The GBPUSD pair saw two-way price action last week and closed in favor of British Pound. The positive price action in favor of British Pound was influenced by EU’s decision to extend the Brexit deadline. However, the timeframe for the extension came with conditions attached to same. UK parliament has to vote in approval of PM May’s Brexit by this week for longer extension or see a shorter extension as the UK seems to be unwilling to participate in EU parliament elections. This resulted in investor focus shifting towards Brexit progress helping British Pound trade positive despite US Dollar’ rebound on Friday as the trading session came to close for the week.
Risk Averse Trading Activity Underpins US Dollar
The weekend saw a massive public demonstration in London in favor of revoking Brexit. According to reports on comments from Organisers of demonstration, close to million people were in participation. As parliament deliberations on further progress in terms of Brexit begins today, all eyes turn to updates from UK parliament. This suggests that Brexit will remain the main driving force behind the pair’s price action during the week ahead. As of writing this article, GBPUSD pair is trading at 1.3175 down by 0.24% on the day. While PM May had commented against revoking article 50, investors continue to hope for the possibility of second Brexit referendum.
However, concerns of economic slowdown following the US T-yield curve inversion which has led to risk-averse investor sentiment is likely to cap gains in the immediate market. Risk-averse trading activity in global equity and forex markets add positive support to USD bulls. This has resulted in the pair falling below 1.3200 handle in late Asian and early European market hours. Economic calendar lacks major impact updates on both sides of the currency pair. This suggests that in the immediate future, price action is likely to be influenced by the strength of the US dollar in the global market and Brexit progress updates from the UK parliament. Expected support and resistance for the pair are at 1.3160, 1.3120, 1.3075 and 1.3200, 1.3230, 1.3270 respectively.
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This article was originally posted on FX Empire
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