- GBP/USD has stretched lower amid renewed US Dollar strength.
- The pair closes in on key support that aligns at 1.2300.
- A risk-off atmosphere in the second half of the day could further weigh on GBP/USD.
GBP/USD has continued to stretch lower toward 1.2300 early Tuesday with the US Dollar preserving its strength amid risk aversion. In case buyers fail to defend 1.2300, Pound Sterling could suffer additional losses in the near term.
On the first trading day of the week, the negative shift witnessed in market mood helped the US Dollar find demand as a safe haven. The S&P 500 Index lost more than 1% after having gained 2.5% last week and the Nasdaq Composite fell 2% on a daily basis. In the European session, US stock index futures are down between 0.3% and 0.4%. An extended slide in Wall Street's main indexes after the opening bell could provide a boost to the US Dollar and force GBP/USD to stretch lower.
Although the data from China showed that the NBS Manufacturing PMI and the Non-Manufacturing PMI both recovered above 50 in January, investors remain cautious while gearing up for the critical central bank policy meetings.
The Conference Board will publish the January US Consumer Confidence Index data later in the day. Market participants are likely to ignore the headline figure and pay attention to the one-year inflation expectation component, which declined to 6.7% in December from 7.1%. Another similar decline could limit the US Dollar's gains with the initial reaction but GBP/USD is likely to have a hard time staging a rebound unless the risk sentiment improves.
GBP/USD Technical Analysis
GBP/USD faces key technical support at 1.2300, where the Fibonacci 23.6% retracement level of the latest uptrend and the 100-period Simple Moving Average (SMA) on the four-hour chart meet. If the pair falls below that level and starts using is as resistance, it could fall toward 1.2270 (static level) and 1.2210 (Fibonacci 38.2% retracement).
On the upside, 1.2350 (static level) aligns as interim resistance before 1.2375 (50-period SMA, 20-period SMA) and 1.2400 (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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
AUD/USD: The hunt for the 0.7000 hurdle
AUD/USD quickly left behind Wednesday’s strong pullback and rose markedly past the 0.6900 barrier on Thursday, boosted by news of fresh stimulus in China as well as renewed weakness in the US Dollar.
EUR/USD rebounds on Thursday after midweek pullback
EUR/USD tuned back into the high end on Thursday, getting bolstered by a broad-market selloff in the Greenback. US data that printed better than expected helped to ease concerns of a possible economic slowdown within the US economy looming over the horizon.
Gold holding at higher ground at around $2,670
Gold breaks to new high of $2,673 on Thursday. Falling interest rates globally, intensifying geopolitical conflicts and heightened Fed easing bets are the main factors.
Ethereum investors show bullish bias amid ETF inflows and positive funding rates, exchange reserves pose risk
Ethereum traded around $2,640 on Thursday, up more than 2% following increased bullish bias among investors, as evidenced by ETH ETF net inflows and an uptrend in funding rates. However, investors may be wary of a potential correction from ETH's rising exchange reserve.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.