Market Overview

GBP/USD Forecast: Global Equities Selloff Takes The Shine Off The US Dollar As Brexit Deal Nears

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  • The US Dollar trades lower against majors amid global equity market selloff.
  • The GBP/USD retreated from 1.3244 high to below 1.3200 ahead of the Bank of England Governor Mark Carney speech.
  • The EU chief negotiator Michel Barnier said 85 percent of Brexit deal is settled.
  • The Bank of England chief economist Andy Haldane said that market expectations of 25 basis point annual increase in interest rates are in line with MPC forecasts.

The GBP/USD is trading little changed just below 1.3200 level against the US Dollar as Sterling benefitted from the combination of Brexit optimism and the US Dollar sliding lower amid global equity markets rout that saw main indices slump 3-4 percent on Wednesday with selloff continuing in Europe on Thursday as well. The Ban of England Governor Mark Carney is scheduled to speak later on Thursday at the IMF annual meeting in Bali.

The Brexit optimism was fueled by the European Union chief Brexit negotiator Michel Barnier saying that 85 percent of Brexit deal has already been settled leaving the Irish border issue unresolved before the European summit on Brexit next week on October 17.

While the UK macro data showed rather disappointing results with manufacturing output and GDP missing the market expectations, the key driver remains Brexit deal and the likelihood of striking the deal next week.

The Bank of England Governor Mark Carney is due to speak later on Thursday at the International Monetary Fund annual meeting in Bali participating in a panel discussion on a new role of central banks in regulation. 

Technically, the GBP/USD is moving within the upward sloping channel on 1-hour chart. The GBP/USD broke the confluence resistance of 1.3103 representing a 100-day moving average and the 38.2 percent Fibonacci retracement of a move from 1.4377 to 1.2662 and now it is moving higher. Technical oscillators like Momentum and the Relative Strength Index on a 1-hour chart are pointing higher while Slow Stochastic retreated lower with GBP/USD correcting below 1.3200 from daily highs. On the upside, the GBP/USD need to break above 1.3220 before testing 1.3265 to resume the uptrend. Only break below 1.3103 would open the way toward testing Tuesday’s low of 1.3030 and 1.2973 representing a 50-day moving average further.

GBP/USD 1-hour chart

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Posted-In: Brexit FXStreet GBP/USDNews Forex Markets

 

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