GBP/USD Daily Price Forecast – GBP/USD Consolidates above 1.28 Handle Ahead of Powell’s Speech

The pair is in bearish consolidation as the greenback takes a breather ahead of Fed Chair Jerome Powell’s Speech.

The GBP/USD pair lost over 100 pips and tested the 1.279 figure, with the Pound undermined by renewed Brexit concerns after the UK Brexit Department release the first of a series of documents aimed to advise people and business in the case of a no-deal Brexit. Despite negotiations have resumed and are set to be non-stop, the document was a reality check for Pound’s bulls, reminding them how high chances are of a hard landing as soon as next March. However US Greenback lost momentum gained from hawkish US Fed update in early hours of Friday’s Asian market session as investors and traders look to Powell’s speech scheduled later today to reaffirm Fed’s hawkish stance. This temporary loss in USD’s momentum helped British Pound find some stability and pair consolidated near lower highs from yesterday’s trading session. As of writing this article, the pair seems to have found support above 1.28 handle and is trading near flat at 1.2824 up 0.07% on the day.

Investors Focus on Powell’s Speech to Re-Affirm Dollar’s Strength

The UK released the CBI Distributive Trade Survey for August, which came in better-than-expected, at 29%, but failed to overshadow Brexit concerns. The greenback, on the other hand, recovered on the back of risk-negative sentiment, surging against its major rivals in spite of soft local data. Looking at schedule of today’s macro calendar, UK’s market will see release of Gross Mortgage Approvals which has a slightly hawkish forecast while the US markets will see release of Core durable goods data which is also expected to have hawkish outcome. Aside from macro data release, today’s investors focus remains on Fed Chair Jerome Powell’s speech to gauge his stance on future rate hike decisions and if his speech shows any signs of being influenced by Trump’s tantrums or reveals any dovish note US Greenback is expected to see great fall in global markets which will result in reversal of recovery made since FOMC update.

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The recovery attempts in Cable are mainly driven by a minor correction seen in the US dollar versus its main peers, as the US-China trade talks end with no major breakthrough while markets resort to take profits off the table following the two-day US dollar rebound. The GBP took a major hit yesterday after the UK’s Brexit Secretary Dominic Raab released 25 so-called “technical notices” that covered everything from financial services to nuclear materials, advising companies and the public on how to prepare for such a no-Brexit deal scenario, suggesting markets that a no-deal outcome could be very well on the cards. When looking from technical perspective, The 4 hours chart for the GBP/USD pair indicates that the ongoing decline could continue during the next couple of sessions, as the pair fell below its 20 SMA, while technical indicators entered negative territory with sharp downward slopes, the Momentum currently in neutral territory and the RSI at 45. Chances to the downside will increase on a break below the 1.2800 figure. Expected support and resistance for the pair are at 1.2800, 1.2765, 1.2730 and 1.2850, 1.2900, 1.2935 respectively.