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GBPUSD Forecast: BoE, FED, Brexit Extension

GBPUSD Forecast: BoE, FED, Brexit Extension

Longer run, we keep sticking on our GBPUSD forecast published last weekend as the things are going on as we predicted.

We have another interesting week ahead.

FED and BoE interest rate decisions and monetary policy statements will be on focus.

As I published shared my thoughts in my EURUSD and GOLD forecast about the U.S. economy and The FED’ s Meeting, I would not repeat them in this article.

You may like to read:

EURUSD Forecast and Technical Overview

 

XAUUSD Gold Forecast: Will FED meeting be the catalyst?

 

Brexit part of the game is also open to lots of surprises. A Brexit extension, its length, and other Brexit events usually overshadow important UK events.

The EU leaders convene on Thursday, March 21st to decide on an extension. They are expected to approve it but want to know why and for how long. The length of the delay is in their hands, and reportedly, they have not thought it through.

If the UK Parliament finally approves the deal, the EU will opt for a temporary extension, just enough for the UK to pass all the related rules and to secure a smooth transition. The UK will be out before the new European Parliament convenes on July 2nd. Such an outcome will be Sterling positive, as it removes uncertainty, but huge moves are unlikely.

A negative chaotic scenario could result in a no-deal Brexit on March 29th. This is certainly not priced in by markets at this point, and the pound may crash with the UK economy.

As I mentioned in my previous Sterling report,  a second referendum option and/or long extension is set to send the pound considerably higher. In this case, we will see a sharp GBP rally against all.

Macroeconomic Calendar of U.K would be very busy next week. Tuesday’s jobs report, Wednesday’s inflation data, Thursday’s retail sales, and the BoE decision would have had a material and long-lasting impact.

I have mentioned several times that the BOE would be happy to raise interest rates given rising wages, the healthy inflation rate, and cheap credit. However, Brexit uncertainty has “paused” policy. The Monetary Policy Committee is likely to keep the rates unchanged.

The BoE is the only Central Bank that is likely to raise the rates along with the FED in 2019.

It is important to note that while the Fed may move most markets, the timing, just before the EU Summit and perhaps at the same time as the third Meaningful Vote, means that GBP/USD will ignore the event.

I will “copy & paste” from my previous GBPUSD report:

Delayed Brexit: ( Probability 99.8 % ) Our trade plan is to buy and add Long at the closing above 1.32200 targeting 1.34500 and 1.37000 with a stop loss below 1.30100. Second Referendum Scenario: Targets 1.4000-1.45000.

Technically:

After breaking the bullish flag on the H4 chart on Friday, Cable tested 1.3300 resistance. 1.32000 support worked well so far and the bullish move will continue as long as the price holds above 1.32200.

Near term targets of the pair: 1.33600 1.34200 and 1.34500 historical level. The firm breakout and daily closing above 1.34500 would send the pair towards 1.35500 and 1.36700.

On the downside 1.32000 remains as strong support. Under the current fundamental conditions, the downside seems to be capped by 1.32000. It is important to note that in the event of a no-deal Brexit, the lines to the downside may all collapse rapidly. And in the event of a second referendum, resistance may evaporate quite quickly as well.

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DISCLAIMER: This is a technical analysis study, not advice or recommendation to invest money

GBPUSD Forecast: Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. Chartreaderpro does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility

 

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