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GBP/USD struggles around 1-week low as odds prevail against UK PM May’s deal

3/29/2019, 11:31:30 AMMarket Analysis
GBP/USD struggles around 1-week low as odds prevail against UK PM May’s deal

GBP/USD trades near 1.3050 during the early Asian session on Friday. The Cable struggles around one week low as Theresa May is likely witnessing third defeat in the UK parliament for her Brexit proposal ahead of today’s vote at 14:30 GMT. Not only Brexit, but the economic calendar could also offer an active day ahead.

Despite the House of Commons’ inability to let any of the eight Brexit proposals through, the British PM Theresa May couldn’t be happy for her deal as not only Democratic Unionist Party (DUP) but an influential Tory lawmaker, Jacob Rees-Mogg, also signaled to vote against her third Brexit plan.

PM May has already shown readiness to resign if the parliament let her plan through, giving way for the Brexit on May 22. However, the majority of the UK lawmakers are against her plan like they were during the last two times and signal another humiliation despite her hard efforts. Should the plan be rejected, as it seems, the UK lawmakers need to approach the EU for another deadline by April 12 and may also get to vote in the EU elections. Some among the political fraternity favor a longer Brexit extension by a year from the March 29 deadline.

On the economic calendar, the final version of the fourth quarter (Q4) 2018 UK gross domestic product (GDP) will be the first to observe. The British Q4 2018 GDP is expected to confirm an initial forecast of 0.2% growth on a QoQ basis while likely remaining unchanged at 1.3% on YoY.

At the US front, data concerning February month personal income, personal spending and new home sales will join Chicago purchasing managers’ index (PMI) and revised Michigan consumer sentiment index for the March month. While personal income and spending data both might print +0.3% growth on a monthly basis against -0.1% and -0.5% respective priors, Michigan consumer confidence could confirm the initial forecast of 97.8. Further, new home sales could rise to +0.620 million from +0.607 million prior but Chicago PMI might soften to 61.0 from 64.47.

GBP/USD Technical Analysis

Sustained break of 50-day simple moving average (SMA) and an upward sloping support-line since January 03 indicate the GBP/USD pair’s further downside towards 200-day SMA level of 1.2980 with 1.3000 likely acting as an intermediate halt. In case bears refrain from respecting 1.2980, 100-day SMA level of 1.2925 may appear on their radar.

Alternatively, 50-day SMA level of 1.3090, followed by a support-turned-resistance line at 1.3110, can limit the pair’s near-term upside. During further advances past-1.3110, 1.3170 and 1.3240 may lure buyers.