GBP/USD Forecast: Brexit talks to reveal next short-term direction
Premium|Take advantage of 60% OFF on your first month.
Grab this special offer, it's 7 months for FREE deal! And access ALL our articles and analysis.
You have reached your limit of 5 free articles for this month.
BLACK FRIDAY SALE! 60% OFF!
Grab this special offer, it's 7 months for FREE deal! And access ALL our articles and analysis.
CLAIM OFFER- GBP/USD has been fluctuating in a relatively tight range.
- UK's Frost says EU proposals on Northern Ireland protocol are not good enough.
- Dollar holds its ground at the start of the week.
GBP/USD has been moving up and down in a narrow band below 1.3800 since the beginning of the week as investors refrain from making large bets while waiting for fresh Brexit developments.
The latest headlines suggest that the UK is not satisfied with the EU's proposals on the Northern Ireland protocol.
David Frost, the British minister responsible for implementing the Brexit deal, said on Monday that the changes offered by the EU don't deliver on the UK's desire of "freeing up" trade in Northern Ireland. "The problem with the EU proposals on Northern Ireland is that they don't go far enough," Frost added. More importantly, Frost rejected the idea of the UK compromising over the European Court of Justice's involvement in overseeing the Brexit deal.
Market participants are likely to ignore the potential positive impact of the Bank of England's (BoE) hawkish policy outlook on the British pound as long as Brexit issues remain unresolved.
In the meantime, the dollar is staying resilient against its major rivals, not allowing GBP/USD to regain its traction. Ahead of September New Home Sales and the Conference Board Consumer Confidence Index data from the US, the US Dollar Index, which tracks the greenback's performance against a basket of six major currencies, is consolidating Monday's gains below 94.00.
Conference Board Consumer Confidence October Preview: Watch what we do...
In case the index manages to climb above that level, technical buying pressure on the dollar could gather strength and weigh on GBP/USD. Nevertheless, the pair's upside potential in the near term remains limited, unless it's driven by positive Brexit headlines, even if the USD loses its footing.
GBP/USD technical analysis
GBP/USD is having a difficult time returning to the ascending regression channel coming from late September. On a slightly bullish note, the Relative Strength Index (RSI) indicator on the four-hour chart is holding near 50, suggesting that sellers are yet to dominate the pair's action.
On the downside, the first technical support aligns at 1.3740 (Fibonacci 23.6% retracement of the latest uptrend) ahead of 1.3700 (psychological level, 200-period SMA, 100-period SMA) and 1.3680 (Fibonacci 38.2% retracement).
A daily close above 1.3800 (psychological level, ascending channel resistance) could be seen as a bullish development. Next resistances could be seen at 1.3830/40 (October 20 high, October 21 high, middle line of the channel) and 1.3880 (static level).
- GBP/USD has been fluctuating in a relatively tight range.
- UK's Frost says EU proposals on Northern Ireland protocol are not good enough.
- Dollar holds its ground at the start of the week.
GBP/USD has been moving up and down in a narrow band below 1.3800 since the beginning of the week as investors refrain from making large bets while waiting for fresh Brexit developments.
The latest headlines suggest that the UK is not satisfied with the EU's proposals on the Northern Ireland protocol.
David Frost, the British minister responsible for implementing the Brexit deal, said on Monday that the changes offered by the EU don't deliver on the UK's desire of "freeing up" trade in Northern Ireland. "The problem with the EU proposals on Northern Ireland is that they don't go far enough," Frost added. More importantly, Frost rejected the idea of the UK compromising over the European Court of Justice's involvement in overseeing the Brexit deal.
Market participants are likely to ignore the potential positive impact of the Bank of England's (BoE) hawkish policy outlook on the British pound as long as Brexit issues remain unresolved.
In the meantime, the dollar is staying resilient against its major rivals, not allowing GBP/USD to regain its traction. Ahead of September New Home Sales and the Conference Board Consumer Confidence Index data from the US, the US Dollar Index, which tracks the greenback's performance against a basket of six major currencies, is consolidating Monday's gains below 94.00.
Conference Board Consumer Confidence October Preview: Watch what we do...
In case the index manages to climb above that level, technical buying pressure on the dollar could gather strength and weigh on GBP/USD. Nevertheless, the pair's upside potential in the near term remains limited, unless it's driven by positive Brexit headlines, even if the USD loses its footing.
GBP/USD technical analysis
GBP/USD is having a difficult time returning to the ascending regression channel coming from late September. On a slightly bullish note, the Relative Strength Index (RSI) indicator on the four-hour chart is holding near 50, suggesting that sellers are yet to dominate the pair's action.
On the downside, the first technical support aligns at 1.3740 (Fibonacci 23.6% retracement of the latest uptrend) ahead of 1.3700 (psychological level, 200-period SMA, 100-period SMA) and 1.3680 (Fibonacci 38.2% retracement).
A daily close above 1.3800 (psychological level, ascending channel resistance) could be seen as a bullish development. Next resistances could be seen at 1.3830/40 (October 20 high, October 21 high, middle line of the channel) and 1.3880 (static level).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.