Market Overview

GBP/USD Forecast: Fed Minutes Set To Provide Clues As Brexit Deal Vote Looms

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  • The GBP/USD is trading little changed at around 1.2740 amid ongoing Brexit deal debate with FOMC meeting minutes highlighting the day.
  • British business leaders to launch emergency no-deal Brexit interventions if May's Brexit deal is defeated in a parliamentary vote next week.
  • The UK government officials confirmed no intention to delay January 15 Brexit deal vote in the parliament.
  • The opposition Labor party leader Corbyn is ready to claim a no-confidence vote almost immediately if May loses Brexit vote next week.
  • The Bank of England Governor Mark Carney is scheduled for online discussion later on Wednesday.

​​​​​​The GBP/USD is trading little changed on the upside at around 1.2740 after it rose from near 1.2700 level earlier on Wednesday with hopes for the US-China trade talks resuming in a deal soon that boosted the US Dollar.

With the UK parliamentary debate on Brexit deal and plenty of political discussion behind the scenes, Brexit uncertainty weighs on Sterling especially after the UK parliament defeated the UK government in a vote late on Tuesday.

The UK parliament approved measures to block a possible no-deal Brexit in a very close 303-296 vote. The UK government must win parliamentary approval for a no-deal Brexit before it can amend tax laws to cope with leaving the EU without a deal. Adding to political uncertainty was the UK Labor party leader Corbyn who said he is ready to claim a no-confidence vote almost immediately if May loses Brexit vote next week.

The UK government officials repeatedly confirmed that there is no intention whatsoever to delay the parliamentary vote scheduled for Tuesday, January 15, next week.

Technically, the GBP/USD is trading in a downward sloping trend on a daily chart while capped by a 50-day moving average at 1.2770. The technical oscillators including Momentum and the Slow Stochastics are pointing higher with the GBP/USD pulling back to 1.2700 expected to generate a bearish crossover in the Overbought territory in Slow Stochastics. The Relative Strength index though still remains flat after turning flat-to-higher as Sterling retreated from last week’s 21-month low at 1.2438. The GBP/USD is expected to remain flat with Brexit headlines likely to weigh on the currency pair while markets will seek clues for the US monetary policy outlook in FOMC meeting minutes and Thursday's Fed Chairman Powell’s speech. Even with GBP/USD resuming sideways trend and a short-term recovery towards 1.2790 or above, this is still not enough to reverse the trend. With Brexit deal uncertainty weighing on Sterling, a fundamental pressure is still in place to see GBP/USD falling further towards 1.2500-1.2440 level.

GBP/USD daily chart

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Posted-In: BrexitGovernment News Eurozone Forex Global Federal Reserve Markets

 

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