GBPUSD: Cloudy Outlook for the British Pound – Eyes on Brexit
Dovish comments from BoE’s Saunders Send GBPUSD Lower
The GBPUSD is down by 0.25% during the Asian session, erasing most of the gains made yesterday. It is trading at 1.3235, which is below yesterday’s high of 1.3311.
The focus today will be on Brexit, where talks are going on in Brussels. Recent media reports have painted a picture where the two sides are close to a deal. But in a report published overnight, The Times said that many EU leaders are getting frustrated about the slow pace of talks.
As such, they have started pressuring the EU commission to come up with plans for a no-deal Brexit. Most importantly, countries like France and Netherlands have expressed concerns about their large fishing industry. This confusion probably explains why the GBPUSD has turned red today.
Looking ahead, the GBPUSD will focus on the EU virtual summit and the important economic numbers from the United States. These include last week’s jobless claims numbers and October’s existing home sales numbers.
These numbers will come a day after we received US building permits and housing starts and the UK inflation data.
GBPUSD technical outlook – 30-minute view
Interestingly, the 30-minute chart looks eerily similar to that of the EURUSD that I have just written about. The pair has managed to move below the rising trendline that connects the lowest points on November 13, 16, and 17. By breaking this support, it is a sign that bears have prevailed. Now, after the sharp decline, the pair seems to be forming a bearish pennant flag, that is shown in green. Therefore, for today, the outlook is still bearish, with the next key support to watch being yesterday’s low of 1.3225.
GBP/USD daily outlook
Now, moving to the daily chart, we see that the GBPUSD pair is in an overall bullish trend. It is also above the black trendline. However, the pair also formed an evening star pattern yesterday. This means that, in the near term, the pair may continue falling, as bears attempt to test the ascending line at 1.3200.