GBP/USD Forecast: Pound Sterling struggles to benefit from risk flows
Premium|Take advantage of 75% OFF on your first month.
Grab this special offer, it's a 1 year 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! 75% OFF!
Grab this special offer, it's a 1 year for FREE deal! And access ALL our articles and analysis.
CLAIM OFFER- GBP/USD has declined below 1.2250 following Monday's upsurge.
- Markets remain indecisive about the BOE's upcoming rate decision.
- Improving market mood could help the pair limit its losses.
GBP/USD has lost its traction and retreated below 1.2250 early Tuesday after having advanced toward 1.2300 on Monday. As markets remain split on the Bank of England's (BOE) next policy decision, the Pound Sterling could have a hard time capitalizing on risk flows.
The broad-based selling pressure surrounding the US Dollar provided a boost to GBP/USD on Monday. In the European morning on Tuesday, the US Dollar Index holds steady supported by recovering US Treasury bond yields. The CME Group FedWatch Tool shows that markets are pricing in a more than 80% probability that the US Federal Reserve (Fed) will raise its policy rate by 25 basis points (bps).
On the other hand, there is a nearly 50%, according to futures market positioning, that the BOE will leave its policy rate unchanged on Thursday.
Hence, the possibility of a policy divergence between the Fed and the BOE might not allow GBP/USD to take advantage of the risk-positive market environment.
In the second half of the day, Existing Home Sales for February will be featured in the US economic docket. Investors, however, are likely to ignore this data.
In case risk flows continue to dominate the markets in the American session with Wall Street's main indexes building on Monday's gains, the US Dollar could stay on the back foot and help the pair limit its losses even if it struggles to gather bullish momentum.
GBP/USD Technical Analysis
The lower limit of the ascending regression channel coming from early March forms strong support at 1.2200. If that level fails, additional losses toward 1.2150 (static level) and 1.2120 (50-period Simple Moving Average (SMA) on the four-hour chart) could be witnessed.
1.2280 (mid-point of the ascending channel, psychological level) aligns as first resistance before 1.2300 (psychological level) and 1.2340 (upper limit of the ascending channel).
- GBP/USD has declined below 1.2250 following Monday's upsurge.
- Markets remain indecisive about the BOE's upcoming rate decision.
- Improving market mood could help the pair limit its losses.
GBP/USD has lost its traction and retreated below 1.2250 early Tuesday after having advanced toward 1.2300 on Monday. As markets remain split on the Bank of England's (BOE) next policy decision, the Pound Sterling could have a hard time capitalizing on risk flows.
The broad-based selling pressure surrounding the US Dollar provided a boost to GBP/USD on Monday. In the European morning on Tuesday, the US Dollar Index holds steady supported by recovering US Treasury bond yields. The CME Group FedWatch Tool shows that markets are pricing in a more than 80% probability that the US Federal Reserve (Fed) will raise its policy rate by 25 basis points (bps).
On the other hand, there is a nearly 50%, according to futures market positioning, that the BOE will leave its policy rate unchanged on Thursday.
Hence, the possibility of a policy divergence between the Fed and the BOE might not allow GBP/USD to take advantage of the risk-positive market environment.
In the second half of the day, Existing Home Sales for February will be featured in the US economic docket. Investors, however, are likely to ignore this data.
In case risk flows continue to dominate the markets in the American session with Wall Street's main indexes building on Monday's gains, the US Dollar could stay on the back foot and help the pair limit its losses even if it struggles to gather bullish momentum.
GBP/USD Technical Analysis
The lower limit of the ascending regression channel coming from early March forms strong support at 1.2200. If that level fails, additional losses toward 1.2150 (static level) and 1.2120 (50-period Simple Moving Average (SMA) on the four-hour chart) could be witnessed.
1.2280 (mid-point of the ascending channel, psychological level) aligns as first resistance before 1.2300 (psychological level) and 1.2340 (upper limit of the ascending channel).
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.