GBP/USD Forecast: Gibraltar Rocks Sterling Ahead Of May-Juncker meeting

• The UK Prime Minister Theresa May is expected to hold a meeting with the European Commission President Jean-Claude Juncker later on Wednesday to discuss Brexit amendments.
• Spain said it will vote against the Brexit agreement asking for the text amendments to Gibraltar proposal on Tuesday.
• UK public sector net borrowing rose above expectations in October, but the year-to-date results were the best since 2005.
• The Brexit uncertainties keep Sterling bind to sub-1.2800 level.

The GBP/USD is trading little changed on the downside at around daily lows of 1.2775 ahead of the UK Prime Minister May meeting with the European Commission President Juncker later this afternoon. The officials are expected to discuss the Gibraltar issue in the text of the Brexit agreement proposal after Spanish Prime Minister Pedro Sanchez said on Tuesday that Spain will vote against the Brexit agreement if the current Gibraltar text is in place. 

The UK public sector net borrowing excluding public sector banks rose to the highest in three years in October 2018 and stood at £8.8 billion, £1.6 billion more than in October 2017, the Office for National Statistics reported earlier on Wednesday.

Looking at the year-to-date measure, the UK public sector net borrowing reported best results since 2005 even as the October finances deteriorated more than expected. The year-to-date public sector net borrowing rose to £26.7 billion, by £11.2 billion less than in the same period last year.

The GBP/USD currency pair continues to slide lower in a downward sloping trend on a daily chart. With Brexit waiting for approval before the weekend European summit on Brexit scheduled for November 25, the potential for the upside is capped by the amendments stemming from Gibraltar claims from Spain. The Momentum and the Relative Strength Index both remain in the neutral zone. The Slow Stochastics is sliding lower in the neutral territory. 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. The future of the GBP/USD depends on the Brexit deal with failure to get it approved could see the 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