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British Pound Forecast: Brexit Talk and BOE Data to Steer the Sterling

British Pound Forecast: Brexit Talk and BOE Data to Steer the Sterling

Nick Cawley, Strategist
British Pound Forecast: Brexit Talk and BOE Data to Steer the Sterling

Fundamental Forecast for GBP: Bullish

- Mixed data releases have hit the wires recently (labor market, inflation) but Q2’18 UK growth looks weak.

- Brexit talk and Bank of England data key will draw attention in the coming week.

- Retail traders are continuing to buy GBP/USD, which leads us to a bearish near-term outlook.

The DailyFX Q2 GBP Forecast is available to download.

We stay bullish on Sterling for the week ahead but caution that ongoing Brexit talks and the Bank of England monetary policy announcement may weigh on GBP. This past week the UK government regained control of the Brexit negotiations, with all the House of Lords amendments defeated in Parliament, although what concessions they gave to the Tory rebels in order to win the votes still remains unclear.

On Thursday the Bank of England is expected to leave all monetary policy levers untouched and the market will then look for clues on future moves from the MPC voting pattern and the subsequent press release. Governor Carney may also give his thoughts on Q2’18 UK GDP after last week’s data looks likely to weigh on second-quarter growth.

Sterling traders should continue to be wary of going long of GBPUSD after this week’s hawkish Fed rate hike and should look at other GBP-pairs for potential bullish set-ups. GBPNZD remains one option along with GBPCAD although both pairs have rallied of their recent lows in the past two weeks. EURGBP also remains on the radar, especially after the ECB-inspired sell-off, but again it may be wise to try and enter bullish GBP set-ups on any set-backs.

We suggested a long GBPNZD trade earlier last week but the recent uptick has taken it away from our suggested set-up.

Join us for the Key UK Events and Markets Webinar every Monday at 11.30 am where we discuss a range of UK asset markets and Sterling crosses.

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

--- Written by Nick Cawley, Analyst

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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