- GBP/USD went into a consolidation phase near 1.2650 in the European morning.
- Technical sellers could remain interested in case 1.2630 support fails.
- Investors await US data releases and FOMC Minutes.
Pressured by the broad-based US Dollar (USD) strength, GBP/USD turned south and declined to its lowest level since mid-December near 1.2600 on Tuesday. Although the pair recovered toward 1.2650 early Wednesday, the technical outlook suggests that the bearish bias remains unchanged.
The decisive rebound seen in the US Treasury bond yields helped the USD outperform its major rivals on the first trading day of 2024. Additionally, the negative shift seen in the risk mood, as reflected by falling US stocks, forced GBP/USD to stay on the back foot.
In the European session, US stock index futures trade virtually unchanged as investors refrain from taking large positions ahead of key macroeconomic data releases from the US.
The ISM Manufacturing PMI is forecast to improve slightly to 47.1 in December from 46.7 in November. JOLTS Job Openings in November are expected to edge higher to 8.85 million from 8.73 million in October. In case both of these figures come in better than analysts' estimates, the USD could regain traction. If the data arrive mixed, markets are likely to wait for the Federal Reserve to release the minutes of the December policy meeting.
According to the CME Group FedWatch Tool, markets are currently pricing in a 75% probability that the Fed will cut the policy rate by 25 basis points in March, suggesting that there is room for renewed USD weakness in case the publication adopts a dovish tone.
In the post-meeting press conference, Fed Chairman Jerome Powell said that policymakers were thinking and talking about when it will be appropriate to cut rates. Investors will look to reaffirm whether officials discussed the timing of a policy pivot.
GBP/USD Technical Analysis
GBP/USD broke below the lower limit of the ascending regression channel and closed the previous five 4-hour candles below the 100-period Simple Moving Average (SMA). Additionally, the Relative Strength Index on the same chart stays below 40, confirming the bearish bias.
On the downside, the 200-period SMA aligns as first support at 1.2630. In case GBP/USD falls below this level and starts using it as resistance, 1.2600 (psychological level) could act as interim support before 1.2550 (Fibonacci 38.2% retracement of the latest uptrend).
Immediate resistance is located at 1.2650 (Fibonacci 23.6% retracement) before 1.2675 (100-period SMA) and 1.2700 (psychological level, static level, 20-period SMA, 50-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 extends recovery beyond 1.0400 amid Wall Street's turnaround
EUR/USD extends its recovery beyond 1.0400, helped by the better performance of Wall Street and softer-than-anticipated United States PCE inflation. Profit-taking ahead of the winter holidays also takes its toll.
GBP/USD nears 1.2600 on renewed USD weakness
GBP/USD extends its rebound from multi-month lows and approaches 1.2600. The US Dollar stays on the back foot after softer-than-expected PCE inflation data, helping the pair edge higher. Nevertheless, GBP/USD remains on track to end the week in negative territory.
Gold rises above $2,620 as US yields edge lower
Gold extends its daily rebound and trades above $2,620 on Friday. The benchmark 10-year US Treasury bond yield declines toward 4.5% following the PCE inflation data for November, helping XAU/USD stretch higher in the American session.
Bitcoin crashes to $96,000, altcoins bleed: Top trades for sidelined buyers
Bitcoin (BTC) slipped under the $100,000 milestone and touched the $96,000 level briefly on Friday, a sharp decline that has also hit hard prices of other altcoins and particularly meme coins.
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.