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GBP/USD Weekly Forecast: GBP/USD, EUR/GBP Eyes Brexit Latest

GBP/USD Weekly Forecast: GBP/USD, EUR/GBP Eyes Brexit Latest

Justin McQueen, Strategist


  • Boris Johnson Steps up No-Deal Rhetoric, but Talks Continue
  • Brexit Headline Watching to Maintain Choppy GBP Conditions

Boris Johnson Steps up No-Deal Rhetoric, but Talks Continue

The soft-deadline of the EU summit has passed with little progress between the EU and UK, which in turn has seen the UK PM step up his no-deal rhetoric. However, this looks to be political posturing with both parties pressing for a compromise by their counterpart. That said, the Pounds brief dip to weekly lows (1.2860) appears to be quite telling that the market is calling Boris Johnson’s bluff that the UK is really heading to a no-deal. Alongside this, talks are set to go ahead next week with EU Chief Negotiator Barnier coming to the UK. While the EU also have their soft-deadline for the end of October, this week highlights that soft-deadlines can be quite easily broken.

Brexit Headline Watching to Maintain Choppy GBP Conditions

As we look to next week, it will be another case of headline watching for GBP traders. While the UK will release its CPI and retail sales figures, it is unlikely to materially move the Pound. That said, one data point to keep an eye on will be the global PMI’s at the back-end of the week, which provides a more real-time update to the current economic backdrop. However, with renewed lockdown measures taking place this month and higher-frequency mobility trackers signalling a slowdown, expectations are for UK PMIs to edge lower.

GBP/USD continues to trade within a range amid back and forth Brexit headlines and with little expected in terms of a breakthrough, I expect similar trading conditions next week and thus being nimble will be key for GBP traders. Near term support issituated at 1.2860, whichhad curbed further losses throughout. However, a break below opens the door to 1.2835-40, before 1.2770. On the topside, resistance is situated at 1.3030-40 with further offers layered ahead at 1.3070.

Implied Weekly Range: 1.2770-1.3075

EUR/GBPrallies have continued to be sold with the cross capped from 0.9100-20. Although, with bids at the 0.90 handle, EUR/GBP trading has remained indecisive. While I remained biased to a pullback on rallies, current levels of 0.9060 leave the cross vulnerable to more two-way risks. That said, a firm break below 0.90 however, puts 0.8935-40 in focus before 0.89.

Implied Weekly Range: 0.8970-0.9150

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