GBP/USD Forecast: Pound Sterling struggles to clear key resistance area

• GBP/USD has been struggling to stabilize above 1.2450/60.
• Near-term technical outlook suggests that the bearish bias stays intact.
• Risk perception could drive the pair's action later in the day.

GBP/USD has lost its traction and started to stretch lower in the European morning following a quiet Asian session on Monday. The pair faces strong resistance in the 1.2450/60 region and sellers could retain control if GBP/USD fails to flip that area into support.

Despite the broad-based US Dollar (USD) strength, GBP/USD managed to close the previous week virtually unchanged on the back of Friday's rebound. 

Although investors remain convinced that the US Federal Reserve (Fed) will leave its policy rate unchanged in June, the market positioning suggests that they reassess the possibility of a rate cut later in the year. According to the CME Group FedWatch Tool, markets are currently pricing in a nearly 60% probability that the Fed's policy rate will stay at its current range of 5-5.25% in September, compared to only 30% last week.

Later in the day, Richmond Fed President Thomas Barkin, Atlanta Fed President Raphael Bostic and San Francisco Fed President Mary Daly will be delivering speeches. Even if Fed officials confirm a pause in June, the US Dollar's losses are likely to remain limited in the near term since markets are more interested in how the policy will look toward the end of the year. 

In the meantime, the UK's FTSE 100 Index is up 0.3% in the early European morning while US stock index futures trade virtually unchanged. In case risk flows return in the second half of the day, the USD could lose strength and allow GBP/USD to stage a rebound. Nevertheless, it's worth mentioning that investors could refrain from leaning toward risk-sensitive assets unless there are positive developments surrounding the debt-limit talks. US President Joe Biden and House Republican Speaker Kevin McCarthy will reportedly talk again later in the day.

GBP/USD Technical Analysis

The descending trend line, the Fibonacci 23.6% retracement of the latest uptrend and the 20-period Simple Moving Average (SMA) form strong resistance in the 1.2450/60 area. If GBP/USD rises above that hurdle and starts using it as support, it could extend its rebound toward 1.2480 (200-period SMA), 1.2500 (psychological level) and 1.2530 (100-period SMA).

On the downside, 1.2400 (psychological level, static level) aligns as key support ahead of 1.2360 (static level) and 1.2330 (Fibonacci 38.2% retracement).