GBP/USD Forecast: Can renewed Brexit optimism save the pound?
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 having a tough time staging a rebound.
- Renewed Brexit optimism could help the British pound find demand.
- The dollar is likely to stay resilient following the hot inflation report.
GBP/USD has extended slide to a fresh 2021 low early Friday before going into a consolidation phase. The pair's potential recovery depends on Brexit developments as the dollar is likely to hold its ground with investors pricing a 72% chance of a Federal Reserve rate hike by June 2022.
Ireland’s Foreign Minister Simon Coveney said on Thursday that they still have time to find a solution to Brexit's Northern Ireland (NI) protocol. Moreover, the Telegraph reported that the European Union was planning to improve its offer to reduce customs checks at the NI border.
On another positive note, the UK Times claimed that David Frost, the British minister responsible for implementing the Brexit deal, looks to engage in intensive talks with the EU over the next few weeks to reach an agreement.
So far, these developments have failed to provide a boost to the British pound but bears could move to the sidelines in case investors shift their focus to Brexit from the policy divergence between the Fed and the Bank of England.
Ahead of the weekend, the University of Michigan's flash Consumer Sentiment Index data for November will be featured in the US economic docket. At the time of press, US stock index futures were up between 0.15% and 0.25%. Unless the consumer confidence data causes a negative shift in risk sentiment, the upbeat market mood and week-end flows could cause the dollar to lose some interest and pave the way for a technical correction in GBP/USD.
GBP/USD Technical Analysis
On the four-hour chart, GBP/USD continues to trade in the descending regression channel coming from late October. The mid-point of the channel is forming resistance at 1.3400 and the pair could climb higher toward 1.3440, where the upper limit of the channel meets a previous support level. Only a daily close above the latter could open the door for a more decisive rebound toward 1.3500 (psychological level).
On the downside, 1.3360 (static level) aligns as initial support ahead of 1.3300 (psychological level). In the meantime, the Relative Strength (RSI) indicator is trying to rise above 30, suggesting that there is more room on the upside before the pair corrects the oversold conditions.
- GBP/USD has been having a tough time staging a rebound.
- Renewed Brexit optimism could help the British pound find demand.
- The dollar is likely to stay resilient following the hot inflation report.
GBP/USD has extended slide to a fresh 2021 low early Friday before going into a consolidation phase. The pair's potential recovery depends on Brexit developments as the dollar is likely to hold its ground with investors pricing a 72% chance of a Federal Reserve rate hike by June 2022.
Ireland’s Foreign Minister Simon Coveney said on Thursday that they still have time to find a solution to Brexit's Northern Ireland (NI) protocol. Moreover, the Telegraph reported that the European Union was planning to improve its offer to reduce customs checks at the NI border.
On another positive note, the UK Times claimed that David Frost, the British minister responsible for implementing the Brexit deal, looks to engage in intensive talks with the EU over the next few weeks to reach an agreement.
So far, these developments have failed to provide a boost to the British pound but bears could move to the sidelines in case investors shift their focus to Brexit from the policy divergence between the Fed and the Bank of England.
Ahead of the weekend, the University of Michigan's flash Consumer Sentiment Index data for November will be featured in the US economic docket. At the time of press, US stock index futures were up between 0.15% and 0.25%. Unless the consumer confidence data causes a negative shift in risk sentiment, the upbeat market mood and week-end flows could cause the dollar to lose some interest and pave the way for a technical correction in GBP/USD.
GBP/USD Technical Analysis
On the four-hour chart, GBP/USD continues to trade in the descending regression channel coming from late October. The mid-point of the channel is forming resistance at 1.3400 and the pair could climb higher toward 1.3440, where the upper limit of the channel meets a previous support level. Only a daily close above the latter could open the door for a more decisive rebound toward 1.3500 (psychological level).
On the downside, 1.3360 (static level) aligns as initial support ahead of 1.3300 (psychological level). In the meantime, the Relative Strength (RSI) indicator is trying to rise above 30, suggesting that there is more room on the upside before the pair corrects the oversold conditions.
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.