- GBP/USD edges lower on Tuesday and stalls a two-day-old recovery trend from a multi-week low.
- Hawkish Fed expectations, recession fears underpin the safe-haven USD and exert some pressure.
- The technical setup favours bearish traders and supports prospects for a further depreciating move.
The GBP/USD pair comes under some selling pressure on Tuesday and stalls its recent recovery from the 1.1915 area, or the lowest level since January 6, touched last week.
Spot prices remain on the defensive through the early European session, though manage to hold above the 1.2000 psychological mark, at least for the time being.
The US Dollar continues to draw support from rising bets for further policy tightening by the Fed and looming recession risks.
Apart from this, speculations that the Bank of England's (BoE) current rate-hiking cycle might be nearing the end undermine the British Pound and contribute to a mildly offered tone around the GBP/USD pair.
The downside, however, remains cushioned as traders seem reluctant to place aggressive directional bets ahead of the release of the FOMC meeting minutes on Wednesday.
Heading into this key event risk, the flash version of the PMI prints from the UK and the US could produce short-term opportunities around the GBP/USD pair on Tuesday.
From a technical perspective, any subsequent downfall is likely to find decent support near the very important 200-day SMA, currently around the 1.1935 region.
This is closely followed by last Friday's swing low, around the 1.1915 zone and the 1.1900 mark, which if broken decisively (being the bottom of a textbook hammer candlestick) should pave the way for a further depreciating move.
Against the backdrop of the recent failures near the 1.2450 area, which constitute the formation of a bearish double top, the downfall will mark a fresh breakdown.
The GBP/USD pair might then accelerate the slide towards the YTD low, around the 1.1840 region touched in January and extend the downward trajectory towards the 1.1800 round figure.
On the flip side, the 1.2050-1.2055 region now seems to have emerged as an immediate hurdle. This is followed by the 1.2070-1.2075 resistance zone and the 1.2100 mark. A sustained strength beyond the latter has the potential to lift the GBP/USD pair beyond the 1.2130-1.2135 barrier, towards the 50-day SMA, currently around the 1.2170 area.
The latter should act as a pivotal point, which if cleared could trigger a near-term short-covering rally.
The GBP/USD pair might then reclaim the 1.2200 mark and climb further to the last week's swing high, around the 1.2265-1.2270 region, before aiming to reclaim the 1.2300 round-figure mark.
GBP/USD daily chart
Key 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 struggles to hold above 1.0400 as mood sours
EUR/USD stays on the back foot and trades near 1.0400 following the earlier recovery attempt. The holiday mood kicked in, keeping action limited across the FX board, while a cautious risk mood helped the US Dollar hold its ground and forced the pair to stretch lower.
GBP/USD approaches 1.2500 on renewed USD strength
GBP/USD loses its traction and trades near 1.2500 in the second half of the day on Monday. The US Dollar (USD) benefits from safe-haven flows and weighs on the pair as trading conditions remain thin heading into the Christmas holiday.
Gold drops to $2,620 area as US bond yields edge higher
Gold struggles to build on Friday's gains and trades modestly lower on the day near $2,620. The benchmark 10-year US Treasury bond yield edges slightly higher above 4.5%, making it difficult for XAU/USD to gather bullish momentum.
Bitcoin fails to recover as Metaplanet buys the dip
Bitcoin hovers around $95,000 on Monday after losing the progress made during Friday’s relief rally. The largest cryptocurrency hit a new all-time high at $108,353 on Tuesday but this was followed by a steep correction after the US Fed signaled fewer interest-rate cuts than previously anticipated for 2025.
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.