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GBP/USD Daily Price Forecast – GBP/USD Struggles To Maintain Upward Price Action Ahead of EU Summit

The GBP heads into a high-impact Wednesday with inflation data for both the EU and the UK on the docket. Today’s EU leadership summit in Brussels promises plenty of Brexit-centric comments, as the current line of rhetoric sees Brexit talks both close and not-close to achieving a deal at the same time. Sterling traders are being sent adrift by an endless barrage of Brexit headlines and comments from EU and UK leaders, with little evidence that any forward progress is being made. UK wages data reported in yesterday’s session helped to bolster the GBP somewhat, but the overall mood in markets remains cautious ahead of Brexit updates from EU-UK Summit and inflation data from both US and UK.

UK Macro Data Outcome Could Be Deciding Factor For Today’s Price Action Direction

As of writing this article, GBP/USD pair is trading at 1.3171 down 0.10% on the day. Alongside the headline-driving EU summit that kicks off today, inflation data from both sides of the pair are expected to keep market volatility high across the day. The RPI, HPI & PPI data in London market are expected to have positive outcome but very little impact on market while the CPIH and CPI data which are expected to have considerable influence on the pair’s price action are forecast to have slightly lower readings compared to previous data. In US markets, FOMC minutes update is expected to reveal hawkish proceedings with reassurance for multiple rate hikes in near future and also see release of crude oil inventory, building permit & housing starts data during North American market hours.

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When looking at pair from technical aspects, in the 4 hours chart, the pair is trading above its 20 SMA while the momentum indicator heads higher around its mid-lines. The RSI indicator eases from its highs and stands at 53, limiting the upward potential for the pair. A break through the 1.3257 level could result in a steeper advance, although it’s all about Brexit and how the market perceives chances of a deal. For now, tightly-stretched hopes for a successful Brexit deal are keeping Cable bulls at bay, with some bullish potential still built into the charts, but downside pressure continues to remain a contender for the GBP/USD’s direction and a dovish macro data outcome in UK’s calendar for the day could see the pair heading in continued downward direction. Expected support and resistance for the pair are at 1.3160, 1.3130, 1.3095 and 1.3210, 1.3260, 1.3300 respectively.

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This article was originally posted on FX Empire

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