GBP/USD Forecast: Pound once again hit by Brexit woes

Valeria Bednarik FXStreet

GBP/USD Current price: 1.2987

EU's chief negotiator Barnier warned “very serious divergences remain” in Brexit trade talks.
The Bank of England will announce its latest decision on monetary policy this Thursday.
GBP/USD is neutral in the near-term, UK developments skew the risk to the downside.

The GBP/USD pair peaked this Wednesday at 1.3140 but it is ending the day in the red a handful of pips below the 1.3000 mark. The early swings that saw the pair also falling to 1.2914 were dollar-lead, amid the lack of definition in the US presidential election. As for UK data, Markit published the final version of the October Services PMI, which was downwardly revised to 51.4.

On the Brexit front, EU's chief negotiator Michel Barnier warned that “very serious divergences remain” in Brexit trade talks, although the UK and the EU will likely extend talks into next week. The news has negatively affected the pound.

This Thursday, the Bank of England will announce its latest decision on monetary policy. The central bank will likely keep rates unchanged, but there’s a good chance it will increase the size of its APP. Policymakers will also provide markets with fresh growth and inflation forecasts, expected to be downgraded from the previous estimates.

GBP/USD short-term technical outlook

The GBP/USD is neutral in the near term, as the 4-hour chart shows that it’s holding around a flat 100 SMA, while above an also directionless 20 SMA. Technical indicators in the mentioned time-frame have turned lower within positive levels, indicating limited buying interest. The bullish case could find some temporal support on US election-related news, but when it comes to UK developments, the risk is skewed to the downside.

Support levels: 1.2950 1.1905 1.2855

Resistance levels: 1.3030 1.3085 1.3130

View Live Chart for the GBP/USD

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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