GBP/USD Forecast: Pound’s decline set to continue
|GBP/USD Current Price: 1.2904
- Concerns about the future UK trade relationship with the EU weighed on Pound.
- The UK will publish its negotiation mandate this Thursday.
- GBP/USD is pressuring the 1.2900 level at risk of retesting the year low at 1.2848.
The GBP/USD pair trimmed Tuesday gains and fell toward the 1.2900 level, holding a handful of pips above this last heading into the Asian opening. There was no particular catalyst for the Pound’s decline, although speculative interest is unwilling to push the pair beyond 1.3000 amid the persistent uncertainty about the future UK relationship with the EU. Trade talks will begin next week, with both parts sticking to their guns. The UK wants a Canada-style trade deal, while the EU demands changes in UK rules to reach a “level playing field.” They have until December to come to an agreement.
In the data front, the UK released the January BRC Shop Price Index, which came in at -0.6% against the previous -0.3%. This Thursday, the kingdom won’t release macroeconomic data, although BOE’s Cunliffe is due to offer a speech. Also, the UK will publish its negotiation mandate this Thursday.
GBP/USD short-term technical outlook
The GBP/USD pair is near daily lows and at risk of retesting this year low at 1.284. The 4-hour chart shows that the pair retreated sharply after failing to advance above a bearish 200 SMA, now trading below all of its moving averages. The Momentum indicator holds around its mid-line, while the RSI hovers around 40, skewing the risk toward the downside.
Support levels:1.2900 1.2850 1.2805
Resistance levels: 1.2960 1.3000 1.3035
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