Sterling (GBP) Price Forecast: Supreme Court Ruling May Stem Latest Rally
Q3 2019 GBP Forecasts and Top Trading Opportunities
Sterling Price Fundamental Forecast: Neutral
Sterling has been slowly moving higher against a range of currencies over the last two weeks as traders continue to price out a no-deal Brexit on October 31. While Sterling may continue to move slowly higher, negative Brexit news will send the British Pound tumbling again. As such the sidelines remain the best place to watch Brexit play out for now.
Next week the Brexit story may well take a new direction if the UK Supreme Court rule that Boris Johnson’s shuttering of Parliament was illegal. If Boris Johnson’s is ruled illegal, then he will be ordered to re-open Parliament immediately, which would signal yet another defeat for the UK’s beleaguered PM. If the Court rules in Johnson’s favor, then the Remain opposition will have little time left to stop the UK potentially leaving the EU without a deal.
Dialogue between the two sides continues daily and UK PM Johnson will meet with various EU officials next week to continue his push for a deal. European Commission President Jean-Claude Juncker recently said thathe had no "emotional relationship" with the Irish backstop, adding that "If the objectives are met - all of them - then we don't need the backstop."The slight change in tone from the EU was picked up as a positive by Sterling traders, pushing GBP higher across the board, before gains were pared.
This week, the Bank of England MPC left all policy measures unchanged as expected due to the Brexit backdrop. A day earlier, the latest UK inflation release showed price pressures easing in August, which when coupled with recent average wage growth leaves the UK consumer with higher real wages. The BoE will be watching the jobs and wages market closely for signs of a pick-up in domestic inflation in the months ahead.
Next week the UK data calendar is empty, leaving Sterling at the whim of any Brexit news or rumors. The recent CoT report showed that traders remain heavily short of GBP and the recent move higher will put pressure on Sterling shorts.
GBPUSD Price Daily Chart (February – September 20, 2019)
The IG Client Sentiment Indicator shows retail traders are 63.0% net-long, a bearish contrarian bias.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.