GBPUSD Forecast: Positive Brexit Sentiment vs Rising DXY
Weak Ahead: Light Brexit calendar, UK PMI, US Labor Market Report incl. NFP
It is looking more likely that PM May’s Brexit deal or a short delay to Article 50 is likely. The UK Prime Minister Theresa May presented her plan of the lower chamber of the British parliament voting on her upgraded Brexit deal for the second time on March 12 with the option of parliament voting in favor of either no-deal Brexit or delayed Brexit. At the same time, the UK macro data were scarce and rather negative, with the UK manufacturing PMI falling to 52.0 in February as Brexit uncertainty weighed on the manufacturing activity and employment, with confidence at a series-record low and the rate of job losses hitting a six-year high.
With the BoE Governor Mark Carney testifying in the House of Lords headlining the calendar next week and no major move on Brexit front, the major Brexit-related event is scheduled for March 12 with the UK parliament voting on renewed Brexit deal proposal from the UK Prime Minister Theresa May that increases the chances of delayed Brexit until June.
Jerome Powel’s testimony was the most important event of the past week. Powell confirmed during the Congressional testimony that the patience is an official stance in term of monetary policy outlook and the Fed expecting some signs of stronger wage growth and the US inflation to run close to its 2% target after transitory effects of recent energy price decline abate. The Fed is now in a position to evaluate “appropriate timing and approach” for the end of its balance sheet runoff, according to Jerome Powell.
The fourth-quarter US GDP came out stronger than expected with a 2.6% quarterly annualized rise.
Important macro data is scheduled to release for the US in the upcoming week that will include the all-important February labor market report. ( NFP & Unemployment )
In the UK, the set of construction and services PMIs are scheduled for the next week together with the Bank of England Governor Mark Carney’ s testimony in the House of Lords.
Cable is retesting the broken neckline of the Inverse Head And Shoulders pattern. That move is a predicted technical correction. The pair ended the week at 1.32040, just above the neckline.
The pair is trading in the upper Bollinger Band and well above EMA 50 and SMA 200 on the Daily Chart. The golden cut is being printed. The main trend is Bullish.
We keep our year-end target at 1.36-1.38. It is likely to test the 1.34500 medium period.
We have entered a short trade based on Bearish ABCD and Total Harmonic pattern. We have reached our ultimate target and closed the trade at 1.32450.
Bearish pressure will remain as long as Cable stays below 1.32700. RSI has a place to go downside. 1.31800 is the key support. H4 Closings below 1.31800 would send the pair 1.31100 and 1.30600.
Our strategy is selling cable below 1.31800 targeting 1.31500 1.31100 and 1.30800. We plan to buy the pair at 1.30600-1.30800 targeting 1.33000 and 1.34500.
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