GBP/USD has been quite impulsive under the bearish pressure recently which pushed the price below 1.2600 area with a daily close. As the UK is facing headwinds due to the BREXIT deal, GBP has lost momentum, plummeting to a 20-month low against USD.
British Prime Minister Theresa May has postponed a parliamentary vote on her Brexit deal to look for more concession, but the European Union refused to renegotiate. British PM Theresa May is still trying quite hard right now, asking for support to fine-tune her Brexit deal in a last ditch bid to save it. The Brexit deal is getting more and more puzzled as the countdown is going on until the deadline of March 29, 2019. Today UK Average Earning Index report was published with an increase to 3.3% from the previous value of 3.1% which was expected to decrease to 3.0%, Unemployment Rate remained unchanged as expected at 4.1%, and Claimant Count Change disappointed with increasing to 21.9k from the previous figure of 20.2k which was expected to decrease to 13.2k.
On the other hand, USD has been struggling with the worse-than-expected economic reports and FED's softer rhetoric on monetary tightening. The Federal Reserve's plans to continue raising interest rates next year were met with more skepticism on Wall Street on Monday. Though FED unveiled its plan to raise the funds rate at least 3 times in 2019, the regulator is currently turning to a pause and indecision due to sharp tightening of financial conditions. In light of the recent downbeat nonfarm payrolls, the economic situation in the US is currently quite uncertain. Ahead of probable rate hike decision this month, the pair is set to trade with higher volatility. Today US PPI report is going to be published which is expected to decrease to 0.0% from the previous value of 0.6% and Core PPI is also expected to decrease to 0.1% from the previous value of 0.5%. Moreover, tomorrow CPI report is expected to reveal a decrease to 0.0% from the previous value of 0.3% and Core CPI is expected to be unchanged at 0.2%.
Meanwhile, future of GBP is currently quite uncertain amid sound economic data but poor fundamentals due to the BREXIT jitters which might lead to severe downward momentum against USD. Traders are cautious to express sentiment on USD amid Fed indecision about a pace of monetary tightening. Nevertheless, traders have optimistic expectations for the nearest economic reports and events that might lead to stable gains in the future.
Now let us look at the technical view. The price has pushed quite impulsively higher today. This led the price to retest 1.2600 area from where it is expected to push lower towards 1.2500-50 support area in the coming days. As the price remains below 1.2700 area with a daily close, further bearish pressure is expected in this pair.
RESISTANCE: 1.2600, 1.2700
The material has been provided by InstaForex Company - www.instaforex.com