- Summary:
- Among the majors yesterday, GBPUSD lost the most. The currency pair even tapped new 5-month lows on negative data and Brexit concerns.
Among the majors yesterday, GBPUSD lost the most. The currency pair dropped from an intraday high of 1.2849 to a low of 1.2738–its lowest level in 5 months. By the end of the New York session, it had settled 19 pips below its opening price at 1.2751.
A couple of factors weighed on the pound. First, there was the final reading of the UK’s manufacturing PMI report for February. It showed a downward revision from the preliminary reading of 51.9 to 51.7. Secondly, no-deal Brexit concerns resurfaced. In a statement, EU officials warned that negotiations between the bloc and the UK could break down because the two sides have differences on certain topics.
Today, BOE members are due to appear in parliament to speak about their economic outlook and inflation at 9:30 am GMT. If central bankers express their concerns especially at the wake of the coronavirus outbreak, we could see GBPUSD trade even lower. On the other hand, their optimism could ignite a rally on the currency pair.
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GBPUSD Outlook
On the hourly time frame, we can see that GBPUSD is trading within a symmetrical triangle. THis becomes apparent when you connect the highs and lows of February 28 and March 2. In forex trading, this is considered as a neutral indicator. A close below today’s low at 1.2739 could mean that GBPUSD may soon fall to support around 1.2583. On the other hand, a close above yesterday’s New York session high at 1.2825 could mean that there are buyers to push the currency pair higher.
On the 4-hour chart, we can see that an upward move on GBPUSD could be limited to 1.2870. This price provides a confluence of resistance. For one, it coincides with the 50% Fib level (when you draw the Fibonacci retracement tool from the high of February 28 to its intraday swing low. It also previously acted as a support level for GBPUSD on February 10 and February 20.