The fundamental outlook for the GBP

The fundamental outlook for the GBP

2019-11-11 • Updated

After testing 1.3380 in March, GBP/USD turned down. Last week, the pound fell below the 200-day MA at 1.2960.

The European Union agreed to postpone Brexit until the end of October. How will this decision influence the GBP in the coming weeks and months?


All in all, the extension of Brexit is mildly positive for the pound. After all, Britain managed to escape the no-deal exit that would be the worst-case option. The pound would have plunged if Britain left the EU without an agreement. At the same time, the country is now obviously in the situation of uncertainty. The lack of clearness about its future weighs on the GBP.  

There’s talk that Prime Minister Theresa May can try to have another go at making the parliament support her proposed EU withdrawal plan. The lawmakers can’t vote again on the same bill within a session, but she may lay out a different bill that would give legal effect to the terms of the withdrawal agreement. In any case, besides this procedural issue, May still lacks the support of the opposition Labour Party and many members of her own Conservative Party as well.

May’s popularity is low, and she will likely struggle to find a solution. In addition, there will be local elections in Britain on Thursday, May 2. There’s a big risk that voters will desert the ruling conservatives. In this case, the GBP will suffer.


So far, the UK economy has been doing fine despite the grim forecasts of various analysts. The nation’s GDP continued growing in February as manufacturers rushed to stockpile goods before Brexit. Still, according to IMF, Britain will suffer economic damage equivalent to the loss of at least 2-3 years of normal growth between now and the end of 2021 if it leaves the EU without a deal.

Inflation has cooled off in Britain from 2.7% in August 2018 to 1.9% y/y in February. In March the situation was unchanged from the previous month. The Bank of England won’t be in a hurry to raise interest rates and will likely once again underline the necessity to solve the Brexit problem first. The BoE will also meet on May 2. As hawkish comments are unlikely, we don't expect the pound to enjoy any kind of positive impact of this event.  

Conclusion: what awaits the pound?

As you can see, although the current picture isn’t too bad for the sterling, it surely doesn’t provide it with comfort. Outside of the UK, the stronger Q1 US GDP growth and the economic weakness in Europe represent bearish factors for the GBP. As a result, until there’s an agreement within the British parliament, the pound will likely stay under negative pressure. It might be quite difficult for it to return above 1.30. In the next few days GBP/USD will be vulnerable for a leg down to 1.28/1.2785.    



What will move the market on September 6-10?
What will move the market on September 6-10?

Last Friday’s NFP was disappointing. The reaction of the markets was astonishing. Will it last longer? Let's find out the main trade opportunities for the upcoming week.

USD Declines on Powell Remarks
USD Declines on Powell Remarks

After multiple hawkish remarks over the past few days from non-voters members, the Federal Reserve chairman Powell surprised the markets with some dovish remarks…

S&P in the Сrosshairs
S&P in the Сrosshairs

Institutional investors speak about further growth in the stock market. In the exact market that has doubled since COVID-19 and doesn’t plan to stop. Is it possible?

Latest news

Walmart earnings outlook
Walmart earnings outlook

Walmart is one of the biggest retail corporations in the US, with $244 billion in total assets. Does it worth buying amid rising prices and supply concerns that shatter the world economy?

What to trade on May 16-20?
What to trade on May 16-20?

Last week brought a selloff in markets. Some assets reached the most crucial support levels and are likely to reverse in a short term. Be ahead of trends and make the most out of this week!

Deposit with your local payment systems

Be on top of your game

Data collection notice

FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.


A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Next callback request for this phone number
will be available in

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later

Don’t waste your time – keep track of how NFP affects the US dollar and profit!

Beginner Forex book

Beginner Forex book will guide you through the world of trading.

Beginner Forex book

The most important things to start trading
Enter your e-mail, and we will send you a free Beginner Forex book

Thank you!

We've emailed a special link to your e-mail.
Click the link to confirm your address and get Beginner Forex book for free.

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera