The GBPUSD pair yesterday saw positive price action as headlines indicated solid progress on Brexit front. Headlines stated that UK PM Theresa May has entered into a collaboration with Opposition party leader Jeremy Corbyn to find a solution to avoiding hard Brexit. Further, the UK parliament has passed the Cooper amendment in UK house of commons which now awaits approval in the house of lords. This amendment facilitates PM May to request for further extension and has raised hopes for the possibility of soft Brexit outcome. Despite the EU’s repeated refusal for renegotiation on Brexit deal, a hard exit is disadvantageous to both parties which continues to support investors expectations for EU turning flexible in the last minute.
Lack Of Macro Data Updates Leaves Headlines in Control Of Momentum
While the pair did see some intra-day downward slide on disappointing macro data outcome yesterday, Brexit updates inspired rally erased intra-day loss and close on a positive note. A weak USD influenced by dovish macro data also contributed to some level of positive bias in the pair’s price action. For now, there is neither directional bias nor a favorable trend visible in the GBPUSD pair. The price action of the pair is simply a reflection of investor sentiment influenced by Brexit headline as deadline approaches. Investors have held back from placing any major bets and have taken to placing short term trades on expectations for short term profit opportunities from ongoing volatility in the market.
As of writing this article, GBPUSD pair is trading at 1.3148 down by 0.08% on the day. Optimism surrounding Sino-U.S. trade talks are also supporting risk appetite in the market facilitating positive price action while keeping USD bulls away. Amid lack of high impact macro data updates on both sides of the calendar, Brexit headlines and broad-based investor sentiment surrounding both currencies continue to dictate price action. Given high hopes of Brexit deadline extension and massive support behind risk asset market bulls, traders hope the price of GBPUSD pair will likely move above 1.32 handle by end of today’s trading session. As per current progress of Brexit, the most possible outcome would be for PM May opting a longer Brexit deadline extension that could see UK face an election and second Brexit referendum which if comes to pass could see Sterling make a sharp jump in the upside.
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