GBP Price Outlook: Traders Hold Their Nerve Despite Brexit Pessimism
GBP price, news and analysis:
- GBPUSD has stabilized near the 1.30 level but a breakdown in the talks between the UK Conservatives and Labour might well send it lower again.
- A poor showing by the ruling Conservative Party in the upcoming European Parliament elections may not yet be fully priced in to GBPUSD and the GBP crosses.
Sterling at risk of further losses
GBPUSD has steadied close to the 1.30 level, with no sign of panic selling on the continuing lack of progress on Brexit. However, there are at least three scenarios which might lead to a further leg lower:
- A breakdown in the Brexit talks between the ruling Conservative Party and the opposition Labour Party. So far both sides have said the talks are not going very well.
- Large losses for the Conservatives in the European Parliament elections that begin on May 23. A YouGov poll for The Times newspaper, published Monday, showed the Conservatives in a lowly fifth place as voters turn against the two major UK parties.
- A continuing refusal by UK Prime Minister Theresa May to set a departure date.
Any one of these could weaken GBP and potentially send it back down to the low at 1.2865 touched on April 25.
GBPUSD Price Chart, Daily Timeframe (February 12 – May 13, 2019)
Chart by IG (You can click on it for a larger image)
On the other side of the coin, there now seems to be strong support for GBPUSD at the psychologically important 1.30 level and there is still a faint chance of an agreement at the cross-party Brexit talks. Moreover, a poor showing by the Conservatives in the upcoming elections may already be reflected in current prices.
If optimism returns, a rally back to the 1.3179 high reached on May 3 would be a possible target.
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--- Written by Martin Essex, Analyst and Editor
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.