GBP/USD - awaiting the outcome of Brexit negotiations
Bearish price action consumed GBP/USD for much of the week, as the backdrop of Brexit came back into focus. With UK:EU negotiations reaching their final stages and with the sentiment leaning towards a No Deal Brexit, this dragged the GBP down relative to the majority of other pairs, including the USD. Price was saved from falling further in the later stages of the week by the lower boundary of the daily channel structure that price has followed since mid-Sept.
A bounce from this lower boundary going into the week ahead would not come as a surprise and could be enough to send prices back towards the resistance level at 1.3380. If bearish price action continues and price closes below the lower boundary of the channel, on the daily timeframe, we could then expect price to fall to the next level of support at 1.3060.
Whilst the outlook for the USD is still very bearish, it’s relative price with GBP will still be dependent upon negotiations over the weekend. Once a clear outcome is announced we recommend waiting to see how the market takes the news before entering any positions on GBP pairs.
A bounce from this lower boundary going into the week ahead would not come as a surprise and could be enough to send prices back towards the resistance level at 1.3380. If bearish price action continues and price closes below the lower boundary of the channel, on the daily timeframe, we could then expect price to fall to the next level of support at 1.3060.
Whilst the outlook for the USD is still very bearish, it’s relative price with GBP will still be dependent upon negotiations over the weekend. Once a clear outcome is announced we recommend waiting to see how the market takes the news before entering any positions on GBP pairs.