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GBPUSD Price Outlook: Risk of Bearish Breakdown

GBPUSD Price Outlook: Risk of Bearish Breakdown

2019-05-15 12:30:00
Justin McQueen, Analyst
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GBP Analysis and Talking Points

  • GBPUSD Remains Pressured by UK Politics
  • GBP Technical Analysis | Trendline Support Broken

See the DailyFXQ2 FX forecast to learn what will drive the currency throughout the quarter.

GBPUSD Remains Pressured by UK Politics

UK politics continues to dictate price action in the Pound and with cross party talks between the government and the labour showing little in the way of progress, gains the pound have been faded with GBPUSD breaking 1.29 on the downside. As such, markets have grown more and more pessimistic that an agreement will be reached by the two parties, thus, failure to do so could see GBPUSD at 3-month lows. Alongside this, Theresa May announced that the withdrawal agreement will be brought back to parliament on the first week of June. However, unless there are notable changes with the support from the Labour it is likely to be rejected yet again. In turn, another failure could see Theresa May resign, however, the next move will depend on who is the next PM, whereby a firmer Brexiteer risks placing renewed pressure on GBP, consequently sparking a move towards 1.2780.

GBP Technical Analysis | Trendline Support Broken

As GBPUSD remains below the 200DMA, the outlook continues to shift towards further downside. The pair also made a break below trendline support, alongside the 23.6% Fibonacci retracement at 1.2890, which in turn raises scope for a test of the April low at 1.2865. A close below this could see losses extend further with the February low (1.2770) in focus.

GBPUSD PRICE CHART: Daily Time Frame (Mar 2018 – May 2019)

GBPUSD Price Outlook: Risk of Bearish Breakdown

Chart by IG

DailyFX Analyst Pick

EURGBP Price Outlook - Rally Running Out of Momentumby Nick Cawley, Market Analyst

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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