- Summary:
- The GBPUSD is trading lower in a choppy day of trading on wariness of upbeat spending in budget speech as well as tough talk on Brexit negotiations.
The GBPUSD is trading lower on the day as the British Pound finds itself under pressure from multiple fronts. First, there are concerns that the UK budget announcement in March may under-deliver in terms of an expected uptick in spending by the government. Analysts are expecting the new finance minister to announce measures to increase government spending in the UK, which has seen its growth stalled by the long-drawn Brexit process.
The much-expected speech by the Bank of England Deputy Governor for Financial Stability Sir Jon Cunliffe did not generate much enthusiasm about the strength of the UK economy.
Cunliffe’s comments were also overshadowed by the UK position on the Brexit trade talks. Michael Gove, a senior British Minister, told Parliament that the UL would not trade away its sovereignty in its quest for the best possible trade deal. Reuters is quoting Gove as saying that the UK “would not accept any obligations where our laws are aligned with the EU”.
The GBPUSD is trading at 1.28912 as at the time of writing, in a choppy day of trading.
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Technical Outlook for GBPUSD
The GBPUSD is challenging the support level at 1.29042. A double candle close below this support confirms a breakdown and reinforces the bearish sentiment which has hit the pair in February. 1.28233 will be the next logical target if the decline is confirmed.
On the flip side, failure of breakdown confirmation would allow the pair to bounce on the current support, targeting the initial upside target above this area at 1.29932. Further break of this area enables the pair to target the broken lower border of the symmetrical triangle, as well as the upper boundary of the descending channel. Only a break of 1.31754 would negate the bearish sentiment and open the door for the resumption of the uptrend.