GPB/USD started garnering some steam around mid-September and consistently traded around/above 1.3000 level until mid-October hitting multi month high of 1.3259 on 12 October. The pair gradually started to falter from 22 October, rather sharply,to hit a multi week low of 1.2777 last Friday. It is now trying hard to remain afloat above 1.2800 mark.
The pair has now drifted into negative territory and has failed to find any meaningful buying interest amid persistent Brexit uncertainties. Sterling continues to remain under pressure. The current Brexit scenario with no-deal expectations growing is not letting it rise to any meaningful level. Meanwhile, the UK government’s internal fighting continues over the issue making the pair vulnerable with each passing day. The EU is closely monitoring internal politicking in UK closely and at present are in no rush to make any concessions.
GBP/USD Technical Outlook:
The pair is trading in a bear trend below the 200-period simple moving average. Immediate support is at the 1.2770-1.2800 region below which the fall could be extended towards 1.2600 level. Any meaningful recovery attempt might now confront immediate resistance near the 1.2880 area and then 1.3000, which will be a very difficult hurdle to breach.
GBP/USD 12 OCT 2018 26OCT 2018
On coming Thursday, the Bank of England will most likely keep all monetary policy settings unchanged and may lower growth and inflation forecasts for the near future. This will in turn send out a strong message that interest rates are not likely to be hiked until at least mid-next year.