Sterling Price Latest: Easing No Deal Brexit Fears Boost British Pound (GBP)
Sterling (GB) Analysis and Brexit Latest:
- Constructive Brexit talk having a positive impact on Sterling.
- Retail undecided but data hints at higher prices.
Sterling Fortified by Positive Irish Border Talk
The British Pound remains bid against both the US dollar and the Euro as fears that the UK will leave the EU on March 29 without a deal continue to recede. The immediate stumbling block for a deal, the Irish backstop conundrum, is now being debated with greater urgency with both sides of the table looking to implement a deal without a hard border in Ireland. Additionally, there are ongoing attempts by various groups of MPs to get a No Deal Brexit option taken off the negotiating table, although PM May is currently resisting these plans. What is becoming more likely - though not probable yet - is that a last minute Soft Brexit deal will be passed eventually, although it may mean Brexit is delayed to help break the deadlock.
Sterling has been appreciating over the last 7-10 days as traders become more confident. The British Pound has been hit hard over the last 2+ years and various GBP-crosses are looking attractive from a technical stance. Expectations that a Soft Brexit deal are accepted will continue to boost GBP although the market remains vulnerable to negative news flow. PM May’s Plan B – very similar to Plan A – in front of the House next Tuesday, January 29, to be voted on. This vote, or a change in voting pattern, may well provide the next catalyst for Sterling.
GBPUSD touched 1.3000 recently and is currently trying to break this level again. This level also coincides with the 200-day moving average which also capped the recent break. The last time that GBPUSD traded above this long-dated moving average was back in May 2018 and if a break succeeds, this would prove a positive impulse for the pair. Above here, 1.3170 and 1.3300 are important targets, and if broken will turn the technical outlook for GBPUSD bullish, opening up further gains.
Sterling is not out of the woods yet, but the view through the trees is becoming clearer.
GBPUSD Daily Price Chart (April 2018 – January 23, 2019)
TheIG Client Sentiment Indicator – a contrarian indicator -shows that retail are evenly split on Sterling’s outlook with data showing that 50.2% of traders are net-long. However, the recent buildup of short positions suggests that GBPUSD may continue to move higher. Download the data to see how it can help you when making trading decisions.
--- Written by Nick Cawley, Analyst
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