GBP/USD Daily Price Forecast – GBP/USD Turns Range Bound as Sino-U.S Trade War Comes Into Focus

The GBP/USD pair is looking to extend its corrective slide from eleven-day tops of 1.2936, as the US dollar pullback deepens on souring risk-sentiment, in the wake of the new US tariffs on the Chinese imports that kicked-in last minutes. The greenback reversed a part of the sell-off fueled by Trump’s Fed criticism and Fed update as the FOMC minutes showed that many participants saw another hike likely ‘soon’. Further, the US dollar also benefits from the escalating US-China trade tensions, which boosts the safe-haven appeal of the buck. Meanwhile, on the GBP-side of the equation, the renewed Brexit optimism could offer some support to the GBP bulls after the EU Chief Brexit Negotiator Barnier and UK Brexit Secretary Raab agreed to hold non-stop Brexit negotiations and pledged to reach a deal. However, it remains to be seen if the spot manages to contain the downside, as the US dollar price-action is expected to remain the exclusive driver ahead of the UK CBI realized sales and US data-sets.

Both Sides of Pair Try To Gain Upper Hand Due To Lack Of Decisive Breakout Trigger

As of writing this article, GBPUSD pair is trading at 1.2875 down 0.28% on the day. While Brexit optimism is supporting British Pound’s strength, the news so far on Brexit proceedings are not solid enough to give Sterling an upper hand over US Greenback. The main reasons as to why the downside movement of the pair is capped temporarily is because US Greenback still faces pressure in global market as Chinese government today retaliated against US by imposing 25% tariff on US goods worth $16 billion in response to US tariff on import of Chinese goods that became effective today and also news of two former campaign advisers of the US President Donald Trump being found guilty on a range of charges and Michael Cohen’s attorney Lanny Davis commenting that Cohen has knowledge of a Russian conspiracy and that there is no dispute that Trump committed a crime.

On release front today, the UK market will see the release of the CBI realized sales survey, foreseen at 13% from the previous 20% while US market will see initial jobless claims and new home sales data with both data’s seeing a forecast value that is higher than the previous reading. As for European market hours, the pair is expected to move range bound trapped above this week’s lows which act as temporary support ahead of macro data updates. From technical perspective, in the 4 hours chart, the price remains well above a bullish 20 SMA, while technical indicators barely eased within overbought readings. The positive momentum should fade on a break below 1.2865 which acts as a strong static support. Expected support and resistance for the pair in near future trading sessions are at 1.2865, 1.2820, 1.2770 and 1.2935, 1.2960, 1.2995 respectively.