Market Overview

GBP/USD Forecast: Sterling Wobbles Around 1.2800 In Brexit Chaos, Remains Vulnerable To Further Fall

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  • UK Prime Minister May insists that the UK will be leaving the EU in March with no obligation on free movement in the backstop. 
  • Theresa May discussed with Michael Gove but will appoint new Brexit Secretary in coming days.
  • Sterling stabilized above 1.2800 after the recent slump, remains vulnerable with liquidity draining and Brexit uncertainty weighing.

Sterling is trading up little changed at around 1.2800 after slumping 2 percent to 1.2720s on Thursday with two government ministers stepping down and the fear of members of parliament calling a no-confidence vote in the final stage of Brexit agreement approval. Sterling remains vulnerable as liquidity drain and the government shakeout keep chances open for Sterling to fall further.

The UK Prime minister Theresa May was discussing the replacement of UK Brexit Secretary Dominic Raab with Michael Gove but did not yet decided yet about the replacement. In a radio speech on Friday, she insisted that with her Brexit agreement the UK is definitely leaving the European Union with no obligation on free movement backstop. “We will see an end to the free movement,” May said.

The GBP/USD currency pair continues to slide lower in a downward sloping trend on a daily chart. The daily swings are massive over the course of last three days with daily ups and downs of 1 percent framed by 1.2722 on the downside and 1.3070 on the upside while the currency pair settled at around 1.2800. With Brexit deal about to be approved, the potential for the upside mounts as the Momentum and the Relative Strength Index both remain in the neutral while pointing upward. The Slow Stochastics sliding lower in the neutral territory. Moreover, the golden cross of a 50-day moving average crossing over a 100-day moving average to the upside was formed on a daily chart indicating final trend reversal targeting 1.3060 before moving to 1.3380 and 1.3460 important Fibonacci level. Failure of Brexit deal to materialize should see GBP/USD fall toward 1.2660 first before testing 1.2100, the post Brexit referendum low before the upward correction started back in March 2017. 

GBP/USD daily chart

gbpusd_daily_chart-636779563919480580.png

Posted-In: Brexit FXStreet GBP?USDNews Forex Markets

 

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