Market Overview

GBP/USD Forecast: Sterling Set To Target 200-DMA At 1.3030

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  • The GBP/USD is trading below 1.3100 after strong US employment report last Friday.
  • The UK construction PMI is expected to decelerate slightly in January to 52.6.
  • Nissan said it canceled its plans to build the SUV plant in Sunderland as Brexit clouds prospects for smooth trading relations with the EU.

The GBP/USD is trading flat at around 1.3080 on Monday after sliding to mid 1.3100s with the US jobs data surprising strongly on the upside with 304K new jobs added in January. The UK Prime Minister Theresa May said on Sunday she would seek a “pragmatic solution” to a parliamentary Brexit deadlock as she tries to reopen talks with Brussels. 

The truth is that there are no immediate plans in place for the issue of the Irish border backstop and therefore there is no date for May to start her renewed discussion in Brussels.

Meanwhile, the economic fundamentals are reflecting the Brexit uncertainty in a lower reading for the measures of the economic activity. The UK manufacturing PMI rose less than expected reaching 52.8 in January as Brexit uncertainty weighs on manufacturers like Nissan while the UK construction PMI is expected to decelerate slightly in January to 52.6.

Technically the GBP/USD is moving within a sideways trend after breaking the downward sloping long-term trend on the upside. The GBP/USD is currently trading above 200-day moving average (DMA) of 1.3030 and while it is capped below 1.3100, the 200-DMA is likely to be the immediate target on the downside.

The technical oscillators like the Relative Strength Index (RSI) and Slow Stochastics (SS) are both pointing lower with Slow Stochastics making a bearish crossover in the Overbought territory indicating future price declines.

GBP/USD daily chart

gbp_usd_daily-636848668134855660.png

Posted-In: BrexitEarnings News Eurozone Forex Global Markets General

 

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