- GBP/USD has retreated below 1.2500 in the European session.
- The pair was last seen trading below the key technical level that aligns at 1.2480.
- GBP/USD could stage a rebound ahead of the weekend on soft US inflation data.
GBP/USD has extended its slide below 1.2500 after having closed the previous two days in negative territory. The broad-based dollar strength continues to weigh on the pair early Friday as investors gear up for the US inflation data.
On Thursday, the European Central Bank (ECB) said there will be a 25 basis points rate hike in July but failed to convince markets that they will opt for a 50 bps increase in September. The shared currency came under strong selling pressure and the British pound managed to capture some of the capital outflows out of the euro. With EUR/GBP falling nearly 100 pips from session highs on Thursday, GBP/USD's losses remained relatively limited.
Earlier in the day, the Bank of England/Ipsos' latest quarterly survey revealed that the public sees inflation rising to 4.6% in the next 12 months, compared to 4.3% expected in February's survey.
Meanwhile, British Prime Minister Boris Johnson said on Thursday that he intends to introduce tax cuts "sooner than later" to ease the burden on households. "Over the next few weeks, this government will be setting out reforms to help people cut costs in every area of household expenditure, from food to energy, to childcare, to transport and housing," Johnson said but these comments failed to help the British pound gather strength.
In the second half of the day, Consumer Price Index (CPI) figures from the US will be watched closely by investors. This time around, the market reaction to the US inflation data should be pretty straightforward. A stronger-than-expected CPI, or core CPI, print is likely to provide a boost to the greenback and vice versa ahead of next week's FOMC meeting.
GBP/USD Technical Analysis
The near-term technical outlook points to a bearish tilt with GBP/USD trading below the 200-period SMA on the four-hour chart. Additionally, the Relative Strength Index (RSI) indicator on the same chart stays near 40, suggesting that the pair could continue to push lower before turning oversold and making a technical correction.
On the downside, 1.2420 (Fibonacci 50% retracement of the latest uptrend) aligns as next support before 1.2400 (psychological level) and 1.2370 (Fibonacci 61.8% retracement).
In order to shake off the bearish pressure, GBP/USD needs to reclaim 1.2480 (200-period SMA, Fibonacci 38.2% retracement). In that case, 1.2500 (psychological level) forms interim resistance ahead of 1.2550 (Fibonacci 23.6% retracement, 100-period SMA).
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
EUR/USD struggles to hold above 1.0400 as mood sours
EUR/USD stays on the back foot and trades slightly below 1.0400 following the earlier recovery attempt. In the absence of high-tier data releases, the negative shift seen in risk mood helps the US Dollar gather strength and forces the pair to stretch lower.
GBP/USD declines toward 1.2500 on renewed USD strength
GBP/USD loses its traction and declines to the 1.2500 area in the second half of the day on Monday. The US Dollar (USD) benefits from safe-haven flows and weighs on the pair as investors await US Consumer Confidence data for December.
Gold drops below $2,620 as US bond yields edge higher
After starting the week in a quiet manner, Gold comes under bearish pressure and retreats below $2,620. The benchmark 10-year US Treasury bond yield stays in positive territory above 4.5%, making it difficult for XAU/USD gain traction.
Bitcoin fails to recover as Metaplanet buys the dip
Bitcoin hovers around $95,000 on Monday after losing the progress made during Friday’s relief rally. The largest cryptocurrency hit a new all-time high at $108,353 on Tuesday but this was followed by a steep correction after the US Fed signaled fewer interest-rate cuts than previously anticipated for 2025.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.