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Basic forecast for GBP: Neutral
Sterling (GBP) Discussion Points: Brexit and the Bank of England
- The month of May is running out of options with the Brexit approach.
- The Bank of England will leave its policy unchanged but will take stock of the Brexit preparations.
The DailyFX GBP Q1 Forecasts are available for download, including our short and medium term badysis of Sterling.
At the time of writing, the The United Kingdom is about to leave the EU in two weeks, after the government lost the second decisive vote Tuesday, with a large majority of 249 votes. The prime minister has promised a third and final vote on his bill to withdraw the vote – expected Tuesday, March 19 – and may also lose the vote. If this is the case, the UK will ask the EU for an extension of Article 50. It is this potential Brexit extension that currently holds sterling at its current level, investors believing that a second referendum or a mild Brexit would become more effective. likely. The UK will still legally leave the EU by default on March 29, unless an extension is agreed. What is increasingly likely is that the EU will grant them an extension only if a clear and feasible agreement is presented to them, or if the United Kingdom promises a second referendum. In his party, the pressure exerted by Prime Minister May is also more pressing, even if it seems unlikely in the short term.
Sterling remains resilient, but next week volatility will increase as time goes down, leaving the GBP threatened with a selloff if no agreement on an extension is agreed.
The Bank of England's latest monetary policy announcement on Thursday will see all monetary parameters unchanged, with Brexit dominating forecasting. BoE Governor Carney will again report on the bank's readiness for anything that happens after March 29th. Before this meeting, the latest British data on jobs and wages will be released Tuesday, one day before the announcement of inflation figures.
DailyFX Economic Calendar
The GBPUSD is currently enjoying a small bid around 1.3200, which, if broken, leaves 1.3177 at the next rung. Below, the 200-day moving average at 1.2940 protects the 23.6% Fib retracement to 1.2894. According to the RSI indicator, GBPUSD is neither over-bought nor over-sold, while IG clients highlight long net positions and net short positions are highly balanced. Overall, however, the chart remains positive, suggesting higher prices ahead.
Looking for a technical point of view on the pound sterling? Check Weekly technical forecast in GBP.
GBPUSD Daily Price Chart (July 2018 – March 15, 2019)
Sense of the client IG The data shows that 50.6% of traders are net GBPUSD. We generally have an opposite view of the general sentiment, and the fact that traders have a net balance suggests that GBPUSD prices could fall. However, if we take into account the recent daily and weekly position changes, we get aGBPUSD's positive trading bias.
Merchants can be interested in two of our commercial guides, especially during periods of volatility – Traits of successful traders and Top trading course – while technical badysts are likely to to be interested in our last Elliott Wave Guide.
— Written by Nick Cawley, Analyst
To contact Nick, write to him at [email protected]
Follow Nick on Twitter @ nickcawley1
Other weekly basic forecasts:
Australian dollar forecast – Australian dollar could fall if RBA speakers remain dovish
Crude Oil Forecast – Outlook for crude oil prices clouded by OPEC meeting and Fed rate decision
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