Sterling Outlook: Brexit Drags on but GBP Remains Supported
GBPUSD Price, Volatility and Brexit
- Meaningful Vote 3 on its way next week.
- The EU may offer a very long Article 50 extension if asked.
Cable ends the week marginally higher after drifting off its Wednesday multi-month highs, but the chart remains positive with higher lows and higher highs dominating in 2019.
Parliament voted by large majority (211) last night to ask for a delay in exiting the EU with the original date of March 29 looking highly unlikely. PM May has said that she will present her Withdrawal Bill again to Parliament next week, Meaningful Vote three, as she continues to try and grind down opposition to her bill. If this is defeated again, which looks likely, she will ask the EU for an extension to the Brexit timetable with early indications that the EU may well offer a 1-2-year extension. Sterling continues to price out the option of a No Deal Brexit with either PM May’s bill, a soft Brexit or even the chance of a second referendum being priced into the British Pound.
GBPUSD –Technical Analysis
While fundamentals continue to drive GBPUSD, the chart looks increasingly positive with a defined up channel since the start of the year with higher lows and highs dominating. The pair trade above all three moving averages and the 38.2% Fibonacci retracement level, and this week made a fresh 9-month high before fading lower. GBPUSD now looks to be a buy-the-dip trade, although as ever Brexit news may foil even the best technical analysis.
GBPUSD Daily Price Chart (May 2018 – March 15, 2019)
Retail traders are 52.0% net-long GBPUSD according to the latest IG Client Sentiment Data, a bearish contrarian indicator. Recent changes in daily and weekly sentiment however currently suggest a mixed trading bias for GBPUSD.
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