GBP/USD Forecast: Sellers await a drop below 1.2130

GBP/USD turned south after failing to stabilize above 1.2200.
The near-term technical outlook points to a bearish tilt.
A drop below 1.2130 could attract technical sellers.

GBP/USD reversed its direction after rising above 1.2200 on Monday and retreated to the 1.2150 area early Tuesday. The pair's near-term technical outlook points a bearish tilt and additional losses could be witnessed if the 1.2130 support fails.

In the absence of high-impact data releases, the improving risk mood made it difficult for the US Dollar (USD) to find demand in the American session on Monday. Meanwhile, Philadelphia Federal Reserve President Patrick Harker reiterated his dovish message by saying that the US central bank was "very likely done" with interest rate hikes, putting additional weight on the USD's shoulders.

Following the soft wage inflation data from the UK, however, GBP/USD lost its traction in the European morning on Tuesday. Average Earnings Including Bonus grew by 8.1% on a yearly basis in the three months to August, the UK's Office for National Statistics reported. This reading followed the 8.5% growth recorded in July and came in below the market expectation of 8.3%.

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 Australian Dollar.

	USD	EUR	GBP	CAD	AUD	JPY	NZD	CHF
USD		0.09%	0.43%	0.18%	-0.20%	0.06%	0.20%	0.22%
EUR	-0.09%		0.35%	0.09%	-0.29%	-0.04%	0.12%	0.13%
GBP	-0.44%	-0.38%		-0.26%	-0.65%	-0.38%	-0.22%	-0.24%
CAD	-0.18%	-0.10%	0.26%		-0.37%	-0.12%	0.05%	0.03%
AUD	0.20%	0.26%	0.64%	0.37%		0.23%	0.43%	0.41%
JPY	-0.06%	0.03%	0.40%	0.14%	-0.24%		0.14%	0.16%
NZD	-0.20%	-0.15%	0.20%	-0.07%	-0.45%	-0.19%		-0.04%
CHF	-0.24%	-0.13%	0.23%	-0.05%	-0.44%	-0.17%	-0.01%

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).

Meanwhile, the cautious market stance helps the USD hold its ground and doesn't allow GBP/USD to shake off the bearish pressure. After moving sideways in the Asian session, US stock index futures started to stretch lower and were last seen losing between 0.25% and 0.3%.

September Retail Sales data for September will be featured in the US economic docket. A negative surprise could hurt the USD but GBP/USD could stay on the back foot unless there is a noticeable positive shift in market mood.

GBP/USD Technical Analysis

GBP/USD turned south after rising to the 1.2200 area, where the Fibonacci 23.6% retracement of the latest downtrend, the 50-period and the 100-period Simple Moving Averages (SMA) are located, confirming the significance of this resistance. In the meantime, the Relative Strength Index (RSI) indicator on the 4-hour chart declined to 40, pointing to a buildup of bearish momentum.

On the downside, 1.2130 (static level) aligns as immediate support. A 4-hour close below that level could bring in additional sellers. In that scenario, GBP/USD could meet interim support at 1.2100 (static level, psychological level) before targeting 1.2050 (end-point of the latest downtrend).

If GBP/USD rises above 1.2200 and confirm that level as support, it could stretch higher toward 1.2250 (static level) and 1.2300 (Fibonacci 38.2% retracement).

Share: Analysis feed

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.