GBP/USD Forecast: Cable Retains Upper Position Thanks To The Fed

The UK Prime Minister Theresa May travels to Brussels today wounded after losing a vote in the UK parliament last night. A revolt in her own Conservative party changed the government’s legislation as lawmakers voted 309 to 305 on legislation that guarantees they will get a “meaningful vote” on the final deal to leave the European Union at the end of negotiations in 2019.

The GBP/USD rose reacting to the US Federal Reserve decision to raise the interest rates but delivering a dovish outlook for inflation while upgrading the short-term growth forecast for 2018 in light of the US tax reform. 

GBP/USD managed to stay above key 1.3320 level and shot up to $1.3450 area after the Fed meeting. Technical oscillators like Momentum indicator and Relative Strength Index are pointing higher, with Sterling trading in a sideways mode since peaking at $1.3550 earlier in December. Fibonacci retracement line of the upmove on GBP/USD starting in April and peaking in the middle of September standing at $1.3300-$1.3320 is now representing the major support line. 

On the upside, near-term resistance is at a round big figure of $1.3500 before the cyclical high of $1.3550. With GBP/USD breaking below $1.3360 the currency pair is seen attacking lower levels of $1.3300-$1.3320.

Scenario of GBP/USD moving sideways in a big picture is unlikely to be altered by the neither UK retail sales report, not the Bank of England rate decision due later on Thursday. 

GBP/USD daily chart