1. Technical Overview
The GBP/USD is moving in a downward sloping trend framed by a two-week high of 1.3238 and last week’s high of 1.3091. After falling sharply last week, the GBP/USD remained stagnant on Monday this week just above 1.2800. The UK Chancellor of Exchequers Phillip Hammond lifted the UK GDP forecast but failed to support Sterling that is increasingly under pressure and the currency pair fall as low as 1.2698 while approaching the cyclical low and 2018 low of 1.2662.
With the spot rate of GBP/USD taking a respite and moving to 1.2750 area on Wednesday, the technical oscillators including Momentum, the Relative Strength Index both turned higher on a 1-hour chart. The Slow Stochastics is about to make a bearish swing lower in the overbought territory. After the GBP/USD fell past price target of 1.2920 and fell to mid 1.2700s, the next target is 1.2662 representing 2018 low.
2. Fundamental Overview
The GBP/USD is trading up 0.3% at around 1.2740 on Wednesday after falling as low as 1.2698 earlier on the day. The GBP/USD is trapped in a downward spiral marking new lows since reaching the double top at 1.3260 on October 12. Since then, the GBP/USD broke below the last two price targets of 1.2920 and 1.2790 as the Brexit uncertainty weighs on currency, heading to a cyclical low and the 2018 low of 1.2662.
The optimism of the UK Chancellor of Exchequer Phillip Hammond about the growth outlook for the UK in his Budget speech saw little currency reaction earlier this week. Philip Hammond raised the forecast for 2019 UK GDP to 1.6% compared with 1.3% in March.