GBP/USD Forecast: Sterling Supported By Dovish Fed As Europe Opposes Brexit Re-Negotiation

• The GBP/USD is trading back above 1.3100 level after dovish Fed saw US Dollar falling across the board.
• The European Union officials unanimously voiced reluctance to re-open the Brexit deal negotiations with the UK Prime Minister May.
• With 57 days before the UK leave the European Union, the clock is ticking up for Brexit deal to be finalized as soon as possible.

The GBP/USD is trading little changed on the upside at around 1.3120 after being boosted by the dovish tone of the US Federal Reverse late on Wednesday. The Federal Reserve said it “will be patient in determining what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes,” confirming recent wait-and-see approach to the policy outlook.

There is no major news on the Brexit front after the UK Prime Minister was appointed by the parliament to re-negotiate the Brexit deal on Tuesday. The European Union officials almost unisono refuse the open the Brexit deal up again while remaining diplomatic on supporting the UK in finding the way to avoid no-deal Brexit.

Above all, the European Commission President Jean Claude Juncker statement stands out. Juncker rejected the possibility of re-negotiating the Irish border backstop saying this is a formal insurance clause for the EU while formally confirming the will to find a common stance.

Technically the GBP/USD jumped above downward sloping trendline and by breaking above 1.3000 it has also conquered the major resistance line representing 38.2% Fibonacci retracement of the upmove from 1.2130 to 1.4177.

The technical oscillators including the Relative Strength Index and Slow Stochastics are both elevated with Slow Stochastics making the bearish crossover in the Overbought territory. After GBP/USD rose to a fresh 15-week high of 1.3214 earlier this week and corrected to 1.3050 thereafter, the currency pair is again in the upside move on Thursday. The upside bias is seen limited by 1.3150 before re-testing 1.3200. The US non-farm payroll report due on Friday is expected to confirm the strength of the US labor market and support the US Dollar again. The bullish breakout of the Fibonacci level of 1.2990-1.3000 becomes a support level now and the first price target on the downside. On the upside, the immediate resistance is at around 1.3150.

The GBP/USD daily chart