GBP/USD Forecast: Pound Sterling stays on the back foot as key resistance holds
- GBP/USD lost its recovery momentum after rising toward 1.2200.
- Investors are unlikely to bet on a steady risk rally in the near term.
- Near-term technical outlook highlights a lack of buyer interest.
GBP/USD lost its traction and erased its daily gains after rising toward 1.2200 in the early European morning. In the absence of high-impact macroeconomic data releases, the cautious market mood is likely to weigh on the pair.
Pound Sterling price today
The table below shows the percentage change of Pound Sterling (GBP) against listed major currencies today. Pound Sterling was the weakest against the Euro.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.15% | -0.01% | 0.06% | 0.28% | 0.04% | 0.22% | -0.04% | |
| EUR | 0.16% | 0.15% | 0.21% | 0.43% | 0.19% | 0.37% | 0.12% | |
| GBP | 0.02% | -0.16% | 0.07% | 0.28% | 0.05% | 0.20% | -0.02% | |
| CAD | -0.05% | -0.22% | -0.08% | 0.21% | -0.01% | 0.15% | -0.08% | |
| AUD | -0.28% | -0.40% | -0.27% | -0.22% | -0.22% | -0.06% | -0.30% | |
| JPY | -0.03% | -0.21% | -0.07% | 0.01% | 0.17% | 0.14% | -0.07% | |
| NZD | -0.20% | -0.36% | -0.22% | -0.16% | 0.06% | -0.16% | -0.24% | |
| CHF | 0.03% | -0.13% | 0.01% | 0.07% | 0.29% | 0.06% | 0.24% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Investors continue to stay away from risk-sensitive assets as geopolitical tensions remain high, with Israel preparing for a ground assault. Over the weekend, Israel’s military said that it will ramp up aerial bombardment of Gaza and called for civilians to evacuate to northern parts of the region
US stock index futures trade modestly lower on the day, pointing to a bearish opening in Wall Street. In case safe-haven flows dominate the financial markets in the second half of the day, the USD could gather strength and force GBP/USD to stay on the back foot.
Early Tuesday, the UK's Office for National Statistics (ONS) will release ILO Unemployment Rate and Employment Change data for August. Since the jobs report will not include wage inflation data, the market reaction is likely to remain muted. Later in the day, S&P Global will publish the preliminary October Manufacturing and Services PMI surveys for the UK and the US.
GBP/USD Technical Analysis
GBP/USD started to edge lower after rising to the 1.2185-1.2200 area, where the 100-period Simple Moving Average (SMA) on the 4-hour chart and the Fibonacci 23.6% retracement of the latest uptrend align. Meanwhile, the Relative Strength Index (RSI) indicator retreated to 50, pointing to a lack of recovery momentum.
Immediate support for GBP/USD is located at 1.2150 (20-period SMA) ahead of 1.2100 (static level, psychological level). A 4-hour close below the latter could open the door for an extended slide toward 1.2050 (end-point of the downtrend).
In case GBP/USD manages to stabilize above 1.2185-1.2200, buyers could show interest. In this scenario, 1.2260 (static level, Fibonacci 38.2% retracement) could be set as the next recovery target.
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Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
