- Sterling holding onto long-term bullish territory, but support base is continuing to weaken as Brexit drags.
- Little data this week leaves the GBP/USD exposed to overall market sentiment.
The GBP/USD is trading lazily ahead of the London market open, sticking in place just beneath the 1.3900 handle.
The Sterling has lifted against the Greenback for four consecutive trading days, but volatility has been restrained and upward movement remains limited. The pair climbed steadily in Tuesday’s trading as overall risk appetite took a swing upwards, and market sentiment looks set to continue to be the main driver for the GBP/USD with only low- and mid-tier data on the offering throughout the week.
The RICS Housing Price data will be dropping early Thursday at 00:01 GMT and the forecast is calling for a showing of 17.1% versus the previous 8.0% reading. Nothing of note remains on the docket until Friday at 09:30 GMT, when Manufacturing and Industrial Production figures get released. The month-over-month manufacturing numbers are expected to contract slightly, forecast at 0.2% versus the previous 0.3%, while industrial figures are anticipated to increase to 1.1% after the previous period’s -1.3% decline.
The UK economic landscape looks healthy and growing at a quickening pace and the Bank of England (BOE) has plenty to celebrate, with markets widely expecting the UK’s central bank to begin lifting interest rates by this May. Despite this, the Sterling is still struggling to make headway against the US Dollar as Brexit concerns continue to drag a toe for the United Kingdom.
Theresa May’s speech last Friday that was supposed to provide some much-needed clarity on the Brexit framework left many questions unanswered, as trade arrangements between the European Union and the UK remain up in the air post-Brexit, and hard answers are coming few and far between for UK business operators who still lack answers about what the regulatory field will look like after Brexit begins in earnest next March.
The pair continues to drift lower despite a consistent turnout from Sterling bulls, and the Daily candles are routinely trading around the 34 EMA, implying weakness building into the Pound’s position. H4 charts tell a gloomier picture, as the pair has been making lower highs for five weeks, and previous support levels from swing lows are rolling over into resistance. Intraday support is currently coming from 1.3815, 1.3765, and 1.3710 with resistance from swing highs at 1.4060 and 1.4145.