GBPUSD pair is trading range bound near mid 1.27 handle with ongoing risk appetite driven market having very little impact on the pair’s price action. Brexit related headlines continue to remain key drivers of the pair’s price action but in absence of any high impact Brexit headlines, broad based US Greenback’s price dynamics continues to drive the price action. UK parliament is currently on a 5 day discussion over PM May’s much hated Brexit deal’s approval and the vote is set to occur on Monday but till data the scenario remains against PM May and her deal and there hasn’t been any major headline in the meanwhile from UK market despite rumors of PM May pulling out deal approval in parliament for second time which suggests the deal may go through full approval process this time.
USD Weakness Main Driving Force Ahead of UK GDP Update
USD continues to remain weak in broad market despite yesterday’s positive rebound as Fed Chair Jerome Powell’s speech last night hurt greenback and greatly changed medium to long term outlook of US dollar. Powell commented that Fed is ready to remain patient on rate hike plans as inflation in US market is currently low and stable which gives FOMC members a little flexibility of future plans regarding policy tightening decisions. However he failed to acknowledge investors views of slowdown in economy citing data which hints at strong labor market. He claims strong labor activity suggests healthy economic climate and will continue to provide momentum for economic growth. Investors and analysts now believe that Fed could possibly keep interest rate unchanged across 2019 opposed to comments from last month which hinted at 2 possible rate hikes.
As Dollar’s long term outlook changed in market it triggered a sharp USD sell off once again, which combined with broad market’s prevalent risk appetite which has sustained bulls across the week helped British Pound maintain a relatively stable price action above mid 1.27 handle during North American and Asian market hours today. As of writing this article, GBPUSD pair is trading at 1.2763 up by 0.12% on the day. Moving forward investors are on lookout for news filled macro calendar schedule for short term opportunities. US market sees release of Core CPI data which is forecast to remain unchanged at 0.2% on MoM basis while UK market sees release of GDP & Trade balance data which are forecast to see lower readings compared to last month while manufacturing production data is expected to see increase in value compared to previous reading. Amid mixed signal British Pound is expected to continue range bound price action but move below mid -1.27 handle during today’s market hours and close positive for the week. Expected support and resistance for the pair are at 1.2740, 1.2725, 1.2650 and 1.2780, 1.2810, 1.2875 respectively.
This article was originally posted on FX Empire
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