- GBP/USD has stretched lower amid renewed US Dollar strength.
- The pair closes in on key support that aligns at 1.2300.
- A risk-off atmosphere in the second half of the day could further weigh on GBP/USD.
GBP/USD has continued to stretch lower toward 1.2300 early Tuesday with the US Dollar preserving its strength amid risk aversion. In case buyers fail to defend 1.2300, Pound Sterling could suffer additional losses in the near term.
On the first trading day of the week, the negative shift witnessed in market mood helped the US Dollar find demand as a safe haven. The S&P 500 Index lost more than 1% after having gained 2.5% last week and the Nasdaq Composite fell 2% on a daily basis. In the European session, US stock index futures are down between 0.3% and 0.4%. An extended slide in Wall Street's main indexes after the opening bell could provide a boost to the US Dollar and force GBP/USD to stretch lower.
Although the data from China showed that the NBS Manufacturing PMI and the Non-Manufacturing PMI both recovered above 50 in January, investors remain cautious while gearing up for the critical central bank policy meetings.
The Conference Board will publish the January US Consumer Confidence Index data later in the day. Market participants are likely to ignore the headline figure and pay attention to the one-year inflation expectation component, which declined to 6.7% in December from 7.1%. Another similar decline could limit the US Dollar's gains with the initial reaction but GBP/USD is likely to have a hard time staging a rebound unless the risk sentiment improves.
GBP/USD Technical Analysis
GBP/USD faces key technical support at 1.2300, where the Fibonacci 23.6% retracement level of the latest uptrend and the 100-period Simple Moving Average (SMA) on the four-hour chart meet. If the pair falls below that level and starts using is as resistance, it could fall toward 1.2270 (static level) and 1.2210 (Fibonacci 38.2% retracement).
On the upside, 1.2350 (static level) aligns as interim resistance before 1.2375 (50-period SMA, 20-period SMA) and 1.2400 (psychological level, static level).
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 advances to near 1.0750 as risk appetite regains balance
EUR/USD extends its winning streak for the third successful day, trading around 1.0730 during the Asian session on Friday. The risk-sensitive currencies like the Euro gain ground as risk appetite regains balance ahead of US Nonfarm Payrolls.
GBP/USD advances to 1.2550, all eyes on US NFP data
The GBP/USD pair trades on a stronger note around 1.2540 amid the softer US Dollar on Friday. The US Federal Reserve Chair Jerome Powell delivered a modest dovish message after the meeting on Wednesday, which weighs on the Greenback.
Gold lacks firm near-term direction, remains stuck in a range ahead of US NFP
Gold price struggles to gain any meaningful traction amid mixed fundamental cues. The Fed’s less hawkish outlook drags the USD to a multi-week low and lends support. Bets for a delayed Fed rate cut and a positive risk tone cap gains ahead of the US NFP.
Solana price pumps 7% as SOL-based POPCAT hits new ATH
Solana price is the biggest gainer among the crypto top 10, with nearly 10% in gains. The surge is ascribed to the growing popularity of projects launched atop the SOL blockchain, which have overtime posted remarkable success.
US NFP Forecast: Nonfarm Payrolls gains expected to cool in April
The NFP report is expected to show that the US economy added 243,000 jobs last month, sharply lower than the 303,000 job creation seen in March. The Unemployment Rate is set to stay unchanged at 3.8% in the same period.