GBP/USD Bid Ahead Of BoE As EU Pledges To Advance Brexit Negotiations

DailyFX Table


The British Pound extends the advance from earlier this week as European Union (EU) Chief Negotiator for Brexit Michael Barnier pledges to meet with U.K. officials within ‘hours or days’ to initiate a new round of talks.

The narrowing threat of a ‘hard Brexit’ may keep the British Pound bid ahead of the Bank of England’s (BoE) quarterly meeting, with the central bank widely anticipated to deliver a 25bp rate-hike on ‘Super Thursday.’ The fresh developments coming out of the BoE may boost the appeal of Sterling should Governor Mark Carney and Co. show a greater willingness to move away from the easing-cycle and implement higher borrowing-costs in 2018. As a result, GBP/USD may continue to retrace the decline from the 2017-high (1.3657) as the BoE starts to normalize monetary policy and lays out a more detailed exit strategy.

However, GBP/USD stands at risk of facing a more bearish fate if the Monetary Policy Committee (MPC) implements a dovish rate-hike and endorses a wait-and-see approach for 2018.

GBP/USD Daily Chart

GBP/USD Daily Chart

  • Keeping a close eye on the topside targets as GBP/USD carves a bullish sequence following the failed attempt to test the monthly-low (1.3027), with both price and the Relative Strength Index (RSI) breaking out of the downward trends carried over from the previous month.
  • First hurdle comes in around 1.3300 (100% expansion) to 1.3320 (38.2% retracement), with the next region of interest sitting around 1.3370 (78.6% expansion) followed by the Fibonacci overlap around 1.3450 (23.6% retracement) to 1.3460 (50% retracement).

    USD/JPY initiates a fresh series of lower highs & lows even as the Bank of Japan (BoJ) sticks to its Quantitative/Qualitative Easing (QQE) Program with Yield-Curve Control, and the pair may continue to give back the advance from the September-low (107.32) should the Federal Reserve highlight a more shallow path for the benchmark interest rate.

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    Author: Travis Esquivel

    Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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