- GBP/USD continues with its struggle to register any recovery from a multi-month trough.
- Traders opt to wait for the UK CPI and FOMC decision, ahead of Thursday's BoE meeting.
- The setup favours bears and suggests that the path of least resistance is to the downside.
The GBP/USD pair extends the previous day's rejection slide from the vicinity of a technically significant 200-day SMA, around the 1.2425-1.2430 region, and remains on the defensive through the Asian session on Wednesday. Spot prices currently trade below the 1.2400 round-figure mark, well within the striking distance of the lowest level since early June.
The British Pound (GBP) is undermined by reduced bets for more aggressive policy tightening by the Bank of England (BoE). This, along with the underlying bullish sentiment surrounding the US Dollar (USD), continues to act as a headwind for the GBP/USD pair. Traders, however, seem reluctant to place aggressive bets and opt to wait on the sidelines ahead of the latest UK consumer inflation figures. This will be followed by the highly-anticipated FOMC policy decision, due later during the US session and the BoE meeting on Thursday.
From a technical perspective, the Relative Strength Index (RSI) on the daily chart is already flashing slightly oversold conditions and helping limit the downside for the GBP/USD pair ahead of the key data/central bank event risks. That said, the lack of any meaningful buying and the overnight failure near the very important 200-day SMA suggests that the recent bearish trend might still be far from being over. Moreover, the recent decline along a downward-sloping channel points to a well-established downtrend and favours bearish traders.
The aforementioned technical setup suggests that the path of least resistance for the GBP/USD pair is to the downside. Hence, a subsequent fall back towards testing the May monthly swing low, around the 1.2310-1.2300 area, looks likely a distinct possibility. The said area coincides with the lower boundary of the aforementioned trend channel, which if broken decisively will set the stage for an extension of the depreciating move. Spot prices might then fall to the 1.2200 mark en route to the next relevant support near the 1.2150-1.2140 zone.
On the flip side, any recovery attempt beyond the 1.2400 mark might continue to confront stiff resistance near the 1.2430-1.2435 region, or the 200-day SMA. A sustained strength beyond might trigger a short-covering rally and allow the GBP/USD pair to reclaim the 1.2500 psychological mark. The momentum could get extended further, though might attract fresh sellers and remain capped near last week's swing high, around the 1.2545-1.2550 area. The latter should act as a pivotal point, which if cleared might shift the bias in favour of bulls.
The GBP/USD pair might then climb to challenge the ascending trend-channel hurdle, currently pegged just below the 1.2600 mark. This is followed by the 100-day SMA barrier, currently pegged around mid-1.26900s, which if cleared decisively will suggest that spot prices have formed a near-term bottom and pave the way for some meaningful appreciating move.
GBP/USD daily chart
Technical levels to watch
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.