Pre FOMC GBPUSD Technical Outlook. The worst performing currency yesterday was Great Britain Pound (GBP), which sold off against all of the major currencies. However, something big is brewing up on the cable.
15 March, AtoZForex -After the House of Commons voted to overturn the amendments to the Brexit bill, the bill was sent back to the House of Lords who backed down on the amendment and passed a bill. The bill would allow Prime Minister May to trigger Article 50. This is to formalize the U.K.’s divorce from the European Union.
According to the PM, they are on track to trigger the article by the end of March and more likely next week. When it happens, it is expected that a sharp but brief knee-jerk volatility in GBP will follow. It won’t be lengthy before investors acknowledge that it will be months before the terms of exit are agreed to with the E.U. and years before an official exit happens.
In the meantime, U.K. labor data is scheduled for release today and while the manufacturing, service and construction sectors all reported consecutive job growth, last month’s strong report may be hard to beat.
Pre FOMC GBPUSD Technical Outlook
The sterling has been quite resilient in face of regional political risks. It has shaken off a whole lot of dirt and perhaps ready to take its kingly place again. From the technical standpoint, the cable made an attempt at the lower end of the rising trendline.
Yesterday’s close should be seen as a classical bear trap market. The reason could not be far-fetched if an engulfing price action close on Monday is anything to go by. From the technical view, we will strongly advise against chasing the bear side of this pair. The current territory favors more upside potential than the downside. Going forward, our aim on dips is to get on the bullish boat as long as 1.2070 support remains intact.
Going forward, our aim on dips is to get on the bullish boat as long as 1.2070 support remains intact. In our piece GBPUSD Weekly trade ideas ahead of Article 50 trigger, the levels were well pointed out.
Verdict: We look to buy the GBPUSD on weakness with 1.2415 as our first target area.
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