Market Overview

GBP/USD Forecast: Riding High On Trump's Comments But Brexit Talks Could Bring It Down

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  • The GBP/USD is trading above 1.2800, pushed higher by a weak USD.
  • Brexit talks resume and another impasse could weigh.
  • The technical picture looks favorable for the pair.

The GBP/USD is trading above 1.2800, the highest in around two weeks. US President Donald Trump criticized the Federal Reserve for raising interest rates and said he would continue doing so. The US Dollar reacted with a downfall that sent cable to new highs. Markets are still digesting his words and wondering if the Fed will succumb to this extraordinary political pressure. In Trump's harsh words against China did not help the mood. 

In the UK, Public Sector Net Borrowing came out at -2.9 billion, a net gain for the government. The data had little impact as the focus remains on Brexit. The relatively new Brexit Minister Dominic Raab will meet Chief EU Negotiator Michel Barnier later in the day. In the background, there are growing concerns that the UK will leave the European Union without a deal, something that could result in economic chaos.

Raab expressed optimism ahead of the meeting. However, in their previous encounter, Barnier rejected the central proposal from the UK government regarding the Customs Union. There is little reason to believe that Barnier moved from his last position.

GBP/USD Technical Analysis

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The GBP/USD is enjoying strong momentum, and the Relative Strength Index is positive yet below 70, thus outside the overbought territory. The pair has also topped the 50 Simple Moving Average on the four-hour chart.

Despite a temporary breach, 1.2830 remains relevant after capping the pair last week. Further up, 1.2920 served as support early in the month. Moving higher, 1.2980 was a resistance line in early August.

1.2760 held the pair down before the recent move higher. 1.2730, close by, was a support line on August 20th and on August 13th. The last line to watch is 1.2662, the 2018 low.

Posted-In: FXStreetNews Eurozone Forex Markets

 

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