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GBP/USD Price Forecast – British Pound Range Bound Ahead of Update From Brussels

The GBPUSD pair opened on a positive note for the week and traded with a positive bias for two consecutive sessions. While the price action was mostly inspired by US Greenback’s weakness at the start of the week and for majority’s of yesterday’s trading session amid lack of macro data updates, news hit market that UK junior business minister commented that there wouldn’t be a no-deal Brexit scenario, which was soon followed by update from PM Theresa May’s spokesperson who told reports that May and EU’s Junker are to meet face to face and discuss reopening withdrawal agreement during their talks. These headlines inspired a fresh wave of bullish price action and served as directional bias given the recent decline over Brexit uncertainties.

Fed Meeting Minutes Could Change Direction of Price Action

UK PM Theresa May and EU’s Juncker are expected to meet today in Brussels and discuss further proceedings on Brexit with an important focus towards possibilities for amending UK’s withdrawal agreement with EU. Headlines pertaining to Brexit negotiation between two parties are expected to be the main driving force of today’s price action. Positive headlines will lead to GBP making a bullish breakout and resuming its bullish price rally aiming to scale 2019 highs. As of writing this article, GBPUSD pair is trading at 1.3042 down by 0.15% on the day. Moving forward, Brexit optimism is expected to keep price action range bound near previous session highs until further headlines hit the market.

However, price action could take an entirely different route depending on US FOMC meeting minutes scheduled to release later today. January Fed meeting minutes will be released during Pacific-Asian market hours and investors await the details in the report for directional cues. If the meeting minutes re-affirms dovish stance, British Pound is likely to continue positive price action while neutral/ bullish tone in the report will lead to Dollar regaining strength in the broad market and erasing all gains made earlier in the day. The pair now needs to breach immediate resistance near 1.3050 and further face strong resistance at 1.3080 / 1.3110 handles which needs to be breached for GBP to establish a dominant rally while to the downside the pair needs to fall below the support level of 1.3000 and 1.2950 handles for Dollar to regain momentum in its favor.

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This article was originally posted on FX Empire

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