GBP/USD Forecast: Sellers eye a drop below 1.3400

GBP/USD has started to edge lower toward the lower limit of trading range.
Renewed dollar strength is weighing on the pair ahead of the New Year holiday.
UK PM Johnson will reportedly assess Omicron data next Monday.

Eren Sengezer FXStreet

GBP/USD has reversed its direction after climbing to its highest level in more than a month at 1.3463 on Tuesday. The pair is closing in on key 1.3400 support and additional losses could be witnessed if buyers fail to defend that level.

The negative shift witnessed in market sentiment seems to be weighing on GBP/USD early Wednesday by providing a boost to the safe-haven greenback. The number of new Coronavirus cases globally is rising at an unprecedented pace and investors grow increasingly concerned about the potential negative impact on the economic activity.

Scotland, Wales and Northern Ireland have already announced additional restrictions focusing on indoor gatherings but several news outlets reported that British Prime Minister Boris Johnson will assess the latest data next Monday. On Tuesday, the UK reported nearly 130,000 new cases.

There won't be any high-tier macroeconomic data releases in the remainder of the week and investors could opt to stay away from risk assets heading into the New Year.

GBP/USD Technical Analysis

With the sharp decline witnessed late Tuesday, GBP/USD broke below the ascending trend line coming from December 21. Additionally, the Relative Strength Index (RSI) indicator on the four-hour chart returned to 50, confirming the view that the pair has lost its bullish momentum.

On the downside, the lower-limit of the weekly trading range is forming key support at 1.3400. In case this level turns into resistance, additional losses toward 1.3370 (former resistance) could be witnessed before 1.3330 (200-period SMA).

The 20-period SMA acts as interim resistance at 1.3420 before 1.3460 (static level) and 1.3500 (psychological level).

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

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.

EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates

Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.

GBP/USD softens to near 1.3600 as BoE hints further rate cuts

The GBP/USD pair loses ground to near 1.3610 during the early Asian session on Monday. The Pound Sterling softens against the Greenback amid growing expectations of the Bank of England’s interest-rate cut. Traders will take more cues from the Fedspeak later on Monday.

Gold holds gains near $5,000 as China's gold buying drives demand

Gold price clings to the latest uptick near $5,000 in Asian trading on Monday. The precious metal holds its recovery amid a weaker US Dollar and rising demand from the Chinese central bank. The delayed release of the US employment report for January will be in the spotlight later this week.

Bitcoin Weekly Forecast: The worst may be behind us

Bitcoin price recovers slightly, trading at $65,000 at the time of writing on Friday, after reaching a low of $60,000 during the early Asian trading session. The Crypto King remained under pressure so far this week, posting three consecutive weeks of losses exceeding 30%.

Weekly column: Saturn-Neptune and the end of the Dollar’s 15-year bull cycle

Tariffs are not only inflationary for a nation but also risk undermining the trust and credibility that go hand in hand with the responsibility of being the leading nation in the free world and controlling the world’s reserve currency.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.