GBP/USD Daily Price Forecast – GBP/USD Consolidates Ahead of FOMC Update

Having hit fresh nine-day tops at 1.2925 in the US last session, the GBP/USD pair entered into a consolidative mode ahead of the 1.29 handle in Asia, as the bulls now look forward to the US housing data and FOMC minutes for the next push higher. The ongoing correction in Cable from thirteen-month lows of 1.2662 is largely in response to the broad-based US dollar weakness. The greenback came under heavy selling pressure over the last two trading sessions after the US President Trump criticized the Fed’s rate hike policy. Meanwhile, the sell-off in the US dollar accentuated following the report that the Trump’s former personal lawyer, Michael Cohen, pleaded guilty on Tuesday to eight charges related to tax fraud, excessive campaign contributions, making false statements to a financial institution and unlawful corporate contribution.

Investors Focus on FOMC Update Before Placing New Bets

Further, the spot also found support from some positive development around the Brexit issue after the two chief Brexit negotiators, Michel Barnier and Dominic Raab, noted that negotiations were in their final stage and will occur continually from in the coming months, despite acknowledging the potential for a no-deal or a “hard” Brexit. Later today, the bulls are awaiting fresh impetus from the US existing home sales data and FOMC meeting minutes, as the UK docket remains data-empty today. Also, in focus remains the release of the first of a series of notices on how to deal with a hard Brexit later this Thursday. As of writing this article, the GBPUSD pair is trading at 1.2910 up 0.11% on the day.

The broader outlook for GBP/USD is still tilted to the downside as both price and the RSI preserve the bearish trends from earlier this year. However, recent price action warns of a larger recovery as the bearish momentum appears to be abating, while pound-dollar carves a series of higher highs & lows. The GBP/USD pair surged above 1.2900 figure for the first time since August 8, maintaining the short-term technical positive stance, given that, in the 4 hours chart, the price is well above a bullish 20 SMA, while technical indicators reached overbought readings, with the Momentum partially losing its upward strength but the RSI still heading north, currently at 78. As long as the pair holds above the 1.2860/70 region, the risk is leaned to the upside, with scope to test the 1.3000 later this week. Expected support and resistance for the pair are at 1.2900, 1.2865, 1.2820 and 1.2950, 1.2995, 1.3030 respectively.