GBPUSD Price Outlook: Brexit Can-Kicking & Flexible Extensions
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GBPUSD Price Analysis and Brexit:
- Sterling unmoved after latest Brexit delay plans.
- GBPUSD still battling trend resistance.
GBPUSD – PM May goes long, EU will want to go much longer.
This morning UK PM Theresa May sent a letter to the EU asking them to extend the Brexit end date until June 30 this year, with the option to bring this date forward if ‘both parties are able to ratify before this date’ to avoid taking part in European parliamentary elections. It is likely that the EU will turn down this request and instead offer the UK a one-year flexible extension with an end date of April 10, 2020, with an option to terminate this date when the Withdrawal Agreement is agreed - a ‘flextension’ according to one EU source. European council president Donald Tusk is said to outline this option at a European summit next Wednesday to avoid having to discuss extending the Brexit process every few weeks.
Sterling has taken this latest news in its stride and continues to trade either side of 1.3100 against the US dollar. Thursday saw GBPUSD sell-off and drop below the recent uptrend, which now looks likely to become a barrier to further upside. The British Pound continues to trade with a small positive Brexit premium built in and today’s news that a further long-extension is likely will shift thoughts that a no deal Brexit is becoming increasingly unlikely and that a second referendum is more likely. Cable trades around mid this week’s 1.3006 – 1.3199 trading range and this is set to hold as things stand, although a US NFP blow-out or large miss may see this range tested.
GBPUSD Daily Price Chart (June 2018 – April 5, 2019)
Retail traders are 70.0% net-long GBPUSD according to the latest IG Client Sentiment Data, a bearish contrarian indicator. See how recent daily and weekly positional changes can move client sentiment.
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