GBPUSD Outlook: No End in Sight for Trend Lower
GBP price, news and analysis:
- GBPUSD is facing further losses as it falls within a well-defined downward-sloping channel on the daily chart.
- The suspension of the British Parliament by Prime Minister Boris Johnson is the latest development to have undermined it.
Further losses likely for Sterling
The GBPUSD price outlook remains negative as it continues to drop within a downward-sloping channel on the daily chart that has been in place since early May. After challenging and failing to rise above the resistance line connecting the lower highs recorded over the last three months, it now looks likely to weaken further, to support at the 1.20 “round number” and even perhaps to the channel support line currently at 1.1860.
In the short-term, however, there is support at 1.2154, where the 20-day moving average kicks in and at the 1.2064 low touched on August 20. To the upside, resistance lies at 1.2290, where the line connecting the lower highs checks in, and then at August 27’s 1.2310 high.
GBPUSD Price Chart, Daily Timeframe (May 1 – August 29, 2019)
Chart by IG (You can click on it for a larger image)
A 'constitutional outrage'
The latest slide lower follows UK Prime Minister Boris Johnson’s decision to suspend the British Parliament for almost a month, in a move seen widely as an attempt to prevent opponents of Brexit from thwarting it. John Bercow, the Speaker of the House of Commons, described the decision as “a constitutional outrage” and it has also increased the chances of both a “no-deal” Brexit on October 31 and a UK General Election this year. A second Brexit referendum is now highly unlikely.
Positioning data bearish too
Further Sterling weakness is also suggested by the latest IG retail trader positioning data. At DailyFX, we take a contrarian view of client sentiment and that data currently implies a bearish outlook for GBPUSD from a contrarian perspective.
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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.