GBP Fundamental Forecast: Positive Brexit Sentiment Feeding Through
Sterling (GBP) Talking Points: Deal or No Deal
- It is looking more likely that PM May’s Brexit deal or a short delay to Article 50 are likely.
- Heavyweight rate decisions and data releases will steer a variety of GBP-pairs.
The DailyFX Q1 GBP Forecasts are available to download including our short- and medium-term look at Sterling.
Looking for a technical perspective on the GBP? Check out the Weekly GBP Technical Forecast.
Fundamental Forecast for GBP: Neutral
A good week for GBP-bulls with Sterling making gains across the board on improving Brexit sentiment. While nothing has yet been agreed, or any other options offered by the EU, the general market belief is that a hard Brexit is increasingly unlikely. While this may well be the case, there is still a small chance that the UK leaves the EU on March 29 by default with No Deal, so care still needs to be taken when trading or positioning Sterling.
In the UK, the latest PMI data will be closely watched, especially as both the services and composite reading currently sit just above the 50 expansion/contraction level and a dip below would generate multiple negative headlines. There are also central bank rate decisions from the Reserve Bank of Australia, the Bank of Canada and the European Central Bank. In addition, there are also the latest US Fed Beige Book and the monthly US non-farm payroll release. Released later in the week.
GBPUSD broke the noted 1.3300 level earlier in the week but struggled to stay above that level. A clear breach and close above here would signal further upside for the pair, although Brexit talk, and news flow will continue to direct Sterling in the short-term.
GBPUSD Daily Price Chart (June 2018 – March 1, 2019)
IG Client Sentiment data show 48.0% of traders are net-long GBPUSD. We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggest that GBPUSD prices may continue to rise. However, if we factor in recent daily and weekly positional changes, we get amixed GBPUSD trading bias.
Traders may be interested in two of our trading guides, especially in times of volatility – 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
To contact Nick, email him at firstname.lastname@example.org
Follow Nick on Twitter @nickcawley1
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