GBP/USD: Dovish FOMC regain market attention amid Brexit noise

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  • Sluggish US data emphasized dovish FOMC.
  • Tuesday’s data from the US and the UK can offer intermediate direction.
  • Major attention remains on Wednesday’s Fed meeting and on-going Brexit developments.

The GBP/USD pair was on bid around 1.3250 during the initial Asian session on Tuesday. The pair differed from Monday-end declines as soft US housing market figures again drew market attention toward dovish FOMC. The pair dropped during Monday after the UK parliament rejected the idea of Tuesday’s voting on the Prime Minister Theresa May’s third Brexit proposal.

With the March month NAHB housing market index from the US remain unchanged at 62 despite 63 forecast, the US Dollar traders reassessed speculations calling for a dovish Federal Open Market Committee (FOMC) appearance on Wednesday. The US Federal Reserve is scheduled to start two-day long monetary policy meeting on Tuesday and is mostly expected to trim its rate-hike predictions to only one for the year 2019 than December month’s call for two such lifts.

The British Pound (GBP) declined after the UK government official confirmed that the PM May’s third proposal for Brexit won’t be up for a vote in the House of Commons on Tuesday as it isn’t drastically different from previously turned down the idea. With this, PM May now has to visit Thursday’s EU summit without any deal and ask for a deadline extension from the regional leaders.

As per the latest report from the Guardian, the EU is ready to give three months of extension (as already signaled by PM May) to the UK’s March 29 deadline.
In addition to speculations concerning the FOMC and developments surrounding Brexit, British employment details and the US factory orders may offer intermediate market moves to pair traders.

The January month average earnings (3m/y) and unemployment rate join February month claimant count change release from the UK at 09:30 GMT. The average earnings may soften to 3.2% from 3.4% whereas earnings excluding bonus and unemployment rate could reprint earlier figures of 3.4% and 4.0% respectively. Also, claimant count change could decline to 3.7K from 14.2K.

Furthermore, the US factory orders growth may strengthen to 0.3% versus 0.1% prior.

GBP/USD Technical Analysis

Immediate upward sloping trend-line joining lows since March 11 can act as adjacent support around 1.3200 round-figure, a break of which can recall 1.3180 and 1.3100 ahead of pushing sellers toward 50-day simple moving average (SMA) near 1.3030.

On the upside, 1.3280 and 1.3360 are likely nearby resistances to watch prior to targeting 1.3410 and 1.3500 during further advances.

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