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British Pound Forecast: EUR/GBP, GBP/USD, GBP/NZD Eye GDP, UK Election

British Pound Forecast: EUR/GBP, GBP/USD, GBP/NZD Eye GDP, UK Election

2019-11-27 04:00:00
Dimitri Zabelin, Junior Currency Analyst
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Euro Outlook, EUR/GBP, Brexit, UK Election – TALKING POINTS

  • EUR/GBP continues to slide but technical cues show downside momentum is fading
  • GBP/USD month-long congestion may dissolve if data catalyzes a downside break
  • British Pound outlook may dim as UK election polls foreshadow a shaky outcome

Learn how to use political-risk analysis in your trading strategy!

GBP/USD Technical Analysis

GBP/USD has been range-bound since mid-October following the pair’s impressive rally where it gained almost five percent in less than a week. Directionless trading in the pair reflects both exhaustion after the spike and uncertainty about whether the rally was an over-exaggerated hype or the beginning of an uptrend.

Recent price action supports the former notion, and as such, the path of least resistance suggests a bearish correction ahead. GBP/USD may then look to re-test support at 1.2816 with an eye at the 1.2708-1.2751 range. A break below the latter with follow-through could catalyze an aggressive selloff.

GBP/USD – Daily Chart

Chart showing GBP/USD

GBP/USD chart created using TradingView

EUR/GBP Outlook

After stubbornly trading sideways for the better half of October and early November, EUR/GBP finally showed a directional bias and broke below the lower bound of the 0.8642-0.8597 congestive zone. A modest retest of the lower-lip has been attempted, though the pullback suggests traders have a more bearish tilt in regard to the pair’s outlook. The next key support to monitor will be the swing-low at 0.8491. Do note that there is some positive RSI divergence, indicating fading downside momentum.

EUR/GBP – Daily Chart

Chart showing EUR/GBP

EUR/GBP chart created using TradingView

See my previous EUR/GBP tech piece on why retesting upcoming support is technically-significant.

GBP/NZD Price Chart

Much like GBP/USD, GBP/NZD has also been stuck in a congestive range after the pair’s dramatic rise, but recent price action suggests the pair is inclined towards favoring a downside breakout. If it breaches 1.9974 with follow-through, the pair may encounter some inter-range support (see chart below) before testing a key floor at range at 1.9405 and 1.9317.

GBP/NZD – Daily Chart

Chart showing GBP/NZD

EUR/GBP chart created using TradingView

Forecasting the British Pound: How the UK Election, Brexit All Impact GBP

The British Pound’s price action has been in large part tied to ongoing Brexit drama, with the most recent risk being about the upcoming UK election. A poll that was released recently showed that the Conservative Party’s lead narrowed, leading to premonitions of a hung Parliament. GBP has frequently risen when polls indicated that the Tories will able to secure a majority because it would make passing a Brexit much more likely.

To keep up-to-date on major political developments impacting markets, sign up for my weekly webinar!

EUR/GBP TRADING RESOURCES

--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

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

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