GBP/USD Price Forecast: Upward Channel Underpins at $1.3740, Ready for a Buy Trade?
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- GBP/USD fell below the 1.3800 level as the data revealed that consumer confidence dropped in October.
- Boris Johnson has threatened to trigger article 16, which will allow the protocol to be suspended if it affects everyday life.
- To sum up, the idea is to take a buy trade above the 1.3760 support level.
On Monday, the GBP/USD attempts to re-establish itself above 1.3780, while the US dollar is losing strength versus a broad basket of currencies. The GBP/USD price forecast seems bullish, especially over the major support level of 1.3742.
The day before, the GBP/USD closed at $1.3751 after setting a high of $1.3816 and a low of $1.3736. Despite the weakness in the US dollar, the GBP/USD fell for the second consecutive session on Friday. Most of the selling was triggered amid mixed UK data and concerns about a Brexit trade deal.
Sterling plunges as retail sales data disappoints.
GBP/USD fell below the 1.3800 level as the data revealed that consumer confidence dropped in October. The retail sales data from the United Kingdom also fell, weighing on the pound and ultimately putting downward pressure on the GBP/USD. The British Pound was under heavy pressure due to mixed UK data and the prevailing Brexit trade deal worries.
On the data front, at 04:01 GMT, the GfK Consumer Confidence from October came as-17 against the expected -16 and weighed on the British Pound, adding further pressure on GBP/USD. At 11:00 GMT, retail sales from the UK in September dropped by 0.2% against the projected 0.6% and weighed on the British Pound, which dragged the currency pair GBP/USD to the downside.
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At 13:30 GMT, the Flash Manufacturing PMI from the UK advanced to 57.7 against the forecasted 56.1 and supported the Pound. Thus, it capped further losses in GBP/USD. The Flash Services PMI also rose to 58.0, against the predicted 54.5.
From the US side, at 18:45 GMT, the Flash Manufacturing PMI from October declined to 59.2 against the predicted 60.5. It weighed on the US dollar, which caused a further loss in GBP/USD. The Flash Services PMI advanced to 58.2 against an estimated 55.3 and supported the US dollar, further pressuring GBP/USD.
At 22:58 GMT, the Federal Budget Balance from September came in line as predicted at 61.5B. The British Pound was already weak on Friday’s trading session after Bloomberg reported that the European Union could terminate the post-Brexit trade deal if the UK disagreement on the Northern Ireland border deepens.
Boris Johnson threatens to trigger article 16
The UK discussed suspending the Northern Ireland Protocol, which governs trade between Northern Ireland and the rest of the UK. PM Boris Johnson has threatened to trigger article 16, which will allow the protocol to be suspended if it affects everyday life.
Both sides have had crunch talks about attempting to resolve the issue. The Brexit trade deal issue has left a strong negative impression on the British Pound, which ultimately weighed on the GBP/USD currency pair and dragged it below 1.3800.
GBP/USD price forecast: Upward trendline to underpins at $1.3742
The GBP/USD has failed to settle below the support level of 1.3745. It’s attempting to reclaim the resistance level of 1.3780. The RSI remains in the moderate range, and there is plenty of possibility for further upside momentum if the correct catalysts arrive.
If the GBP/USD breaks through the resistance at 1.3780, it can challenge the next resistance level at 1.3800. A successful test of the resistance at 1.3800 can pave the door for the following resistance at 1.3835 to be tested. If GBP/USD settles beyond this level, it can advance towards the 1.3875 resistance level.
On the support side, GBP/USD’s immediate support level is prevailing around 1.3745. If the GBP/USD falls below this level, it can acquire more bearish momentum. Thus, it may head towards the support level, situated at the 50 EMA at 1.3715. If the support at the 50 EMA is successfully tested, GBP/USD can be pushed towards the next support level at 1.3690. To sum up, the idea is to take a buy trade above the 1.3760 support level.
