GBPUSD Outlook: Positive on Talk of Brexit Deadline Extension
GBP price, news and analysis:
- Talk of an extension of the March 29 Brexit deadline for the UK to leave the EU is strengthening GBPUSD.
- It reached a high of 1.3095 early Thursday, its strongest level since November 8 last year, before easing back marginally, and could yet extend its gains.
GBP price firm; further gains possible
GBPUSD hit its highest level Thursday since early November before easing back a tad. It now seems to be in a good place to extend its gains, having climbed above the psychologically important 1.30 level that may limit any losses.
GBPUSD Price Chart, Daily Timeframe (September 12, 2018 – January 24, 2019)
Chart by IG (You can click on it for a larger image)
Sterling’s primary driver remains Brexit and it is benefiting from speculation that the so-called Article 50 deadline of March 29 for the UK to leave the EU could be extended.
Meanwhile, from a technical perspective, the next target will likely be the high at 1.3175 reached on November 7 last year. To the downside, trendline support lies at 1.2832 if 1.30 is breached.
Bullish signal from sentiment data
In the meantime, retail trader sentiment data show 44.5% of GBPUSD traders are net-long, with the ratio of traders short to long at 1.25 to 1. The number of traders net-long is 6.4% lower than yesterday and 15.1% lower than last week, while the number of traders net-short is 17.4% higher than yesterday and 31.3% higher from last week.
At DailyFX, we typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests the GBPUSD price may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBPUSD-bullish contrarian trading bias.
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--- Written by Martin Essex, Analyst and Editor