GBP/USD: Stormy Clouds Over Westminster

Apr. 03, 2019 10:52 AM ETDGBP, GBB-OLD, UDN, UGBP, USDU, UUP, FXB


  • The sterling fell to the predicted level of my prior article.
  • The British pound is at a critical crossroad.
  • The level of uncertainty surrounding the Brexit issue will help infuse some bullish energy into the greenback.

In my last article on January 3rd, I had highlighted that the pattern the British pound (FXB) was trading in was risky. I said this because I expected the currency to have a decline if the level of Brexit uncertainty were to rise further. This fear of mine proved to be true as the sterling had a downside breakout which resulted in it falling till the support level at 1.249. However, I believe the currency's descent has now come to an end as I expect the British pound to trade in a sideways pattern in the coming days. Hence, to establish the likelihood of this occurring, I will look at the fundamental news affecting the currency, while also analyzing the chart using technical analysis tools.

Fundamental news:

British macroeconomic data:

One of the reasons I expect a sideways pattern in sterling's value is due to the latest British macroeconomic data. The Manufacturing Purchasing Managers Index rose to 55.1 in March, which surpassed the analyst estimate of 51.2. Moreover, the GDP level met analyst expectations as it came in at 0.2%, which is the same as the analyst forecast. Hence, due to all the macroeconomic data being neutral or positive, I expect a sideways pattern to form in the currency.

American statistics:

The latest U.S. statistics have been negative. Retail sales fell by 0.2% in February after an increase of 0.7% in January. Moreover, the core retail sales value fell by 0.4% which is a steep decline from the prior month's increase of 1.4%. Hence, I believe these two statistics will place a great deal of bearish pressure on the greenback. This, in turn, will provide the sterling with some much-needed support.


I believe the high level of confusion created by Brexit in the United Kingdom will significantly benefit the

This article was written by

I am a finance and investment professional whose prime focus is on the British, Indian and American financial markets. I specialise in technical analysis with my key area being Candlestick pattern analysis and Fibonacci analysis.  Academically, I posses two masters degrees one is a Masters of Science in Finance degree from the University of Portsmouth, United Kingdom and the other is a Masters of Commerce degree specialising in Accounting. My Bachelors degree is in Economics, Finance and Banking from the University of Portsmouth, United Kingdom.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Recommended For You


To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.