GBP/USD Forecast: Bears could wait for a correction to 1.3140
Premium|Take advantage of 60% OFF on your first month.
Grab this special offer, it's 7 months for FREE deal! And access ALL our articles and analysis.
You have reached your limit of 5 free articles for this month.
BLACK FRIDAY SALE! 60% OFF!
Grab this special offer, it's 7 months for FREE deal! And access ALL our articles and analysis.
CLAIM OFFER- GBP/USD has gone into a consolidation phase after Monday's drop.
- There could be a technical correction to 1.3140 before the next leg lower.
- BOE Governor Bailey's cautious tone on rate outlook hurts the British pound.
GBP/USD has gone into a consolidation phase near 1.3100 early Tuesday after having suffered heavy losses at the beginning of the week. The near-term outlook suggests that the pair could extend its recovery but sellers are likely to retain control unless 1.3140 resistance fails.
While speaking at a virtual event on Monday, Bank of England (BOE) Governor Andrew Bailey noted that they have to be very cautious on the forward guidance language due to heightened uncertainty surrounding the economic outlook. When asked directly whether or not there will be another rate hike in May, "the situation is very volatile," Bailey responded.
Although the dollar rally lost its stream on retreating US Treasury bond yields in the second half of the day, GBP/USD ended up losing more than 100 pips on Monday, reflecting the negative impact of Bailey's comments on the British pound.
The positive shift witnessed in risk sentiment seems to have helped the pair shake off the bearish pressure early Tuesday. The UK's FTSE 100 Index is up 0.8% and the greenback stays on the back foot with the US Dollar Index posting modest daily losses near 99.00.
Later in the session, the Conference Board's US Consumer Confidence data for March will be looked upon for fresh impetus. Investors will also keep a close eye on the Fedspeak. Following Bailey's latest remarks, it's clear that the Fed looks to tighten its policy in a more aggressive way than the BOE in the upcoming meetings. Hence, GBP/USD's rebounds are likely to remain limited by key technical levels.
GBP/USD Technical Analysis
On the four-hour chart, the Relative Strength Index (RSI) indicator is about to cross below 30, suggesting that the pair is on the verge of turning technically oversold.
On the upside, 1.3100 (psychological level, Fibonacci 23.6% retracement of the latest downtrend) aligns as the first technical resistance. With a four-hour close above that level, the next recovery targets could be seen at 1.3140 (100-period SMA) and 1.3160 (Fibonacci 38.2% retracement).
On the flip side, a drop below 1.3060 (static level) could open the door for an extended decline toward 1.3000 (psychological level, static level).
- GBP/USD has gone into a consolidation phase after Monday's drop.
- There could be a technical correction to 1.3140 before the next leg lower.
- BOE Governor Bailey's cautious tone on rate outlook hurts the British pound.
GBP/USD has gone into a consolidation phase near 1.3100 early Tuesday after having suffered heavy losses at the beginning of the week. The near-term outlook suggests that the pair could extend its recovery but sellers are likely to retain control unless 1.3140 resistance fails.
While speaking at a virtual event on Monday, Bank of England (BOE) Governor Andrew Bailey noted that they have to be very cautious on the forward guidance language due to heightened uncertainty surrounding the economic outlook. When asked directly whether or not there will be another rate hike in May, "the situation is very volatile," Bailey responded.
Although the dollar rally lost its stream on retreating US Treasury bond yields in the second half of the day, GBP/USD ended up losing more than 100 pips on Monday, reflecting the negative impact of Bailey's comments on the British pound.
The positive shift witnessed in risk sentiment seems to have helped the pair shake off the bearish pressure early Tuesday. The UK's FTSE 100 Index is up 0.8% and the greenback stays on the back foot with the US Dollar Index posting modest daily losses near 99.00.
Later in the session, the Conference Board's US Consumer Confidence data for March will be looked upon for fresh impetus. Investors will also keep a close eye on the Fedspeak. Following Bailey's latest remarks, it's clear that the Fed looks to tighten its policy in a more aggressive way than the BOE in the upcoming meetings. Hence, GBP/USD's rebounds are likely to remain limited by key technical levels.
GBP/USD Technical Analysis
On the four-hour chart, the Relative Strength Index (RSI) indicator is about to cross below 30, suggesting that the pair is on the verge of turning technically oversold.
On the upside, 1.3100 (psychological level, Fibonacci 23.6% retracement of the latest downtrend) aligns as the first technical resistance. With a four-hour close above that level, the next recovery targets could be seen at 1.3140 (100-period SMA) and 1.3160 (Fibonacci 38.2% retracement).
On the flip side, a drop below 1.3060 (static level) could open the door for an extended decline toward 1.3000 (psychological level, static level).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.