GBP/USD Forecast: Bears eye a break below 1.2350

GBP/USD has turned south, dropping below 1.2400 early Wednesday.
A four-hour close under 1.2350 could bring in additional sellers.
Risk mood is likely to continue to drive the pair's action in the near term.

Eren Sengezer FXStreet

GBP/USD has reversed its direction, declining below 1.2400 early Wednesday, after having managed to close in positive territory above this level on Tuesday. The technical outlook points to a bearish tilt in the short term and a break of the 1.2350 support could open the door for an extended slide.

The risk-positive market atmosphere made it difficult for the US Dollar (USD) to find demand in the first half of the day on Tuesday and helped GBP/USD stage a decisive rebound. In the late American session, however, markets turned cautious after the bill to suspend the debt ceiling only narrowly passed the House Rules Committee.

Early Wednesday, US stock index futures are down between 0.2% and 0.3%, suggesting that market participants are refraining from committing to a risk rally as the bill moves to a vote in the House. Several Republicans have spoken out against the debt-limit deal and investors are sceptical whether the bill could be approved quickly.

In case safe-haven flows dominate the financial markets in the second half of the day, GBP/USD is likely to have a difficult time retracing its daily decline. On the flip side, a positive shift in market mood could weigh on the USD and help the pair limit its losses.

GBP/USD technical analysis

The upper-limit of the broken descending channel aligns as key support level at 1.2350. If GBP/USD falls below that level and starts using it as resistance, it could face interim support at 1.2320 (Fibonacci 38.2% retracement level of the latest uptrend) before falling toward 1.2300 (psychological level, mid-point of the descending channel). In case 1.2300 fails, the next bearish target could be seen at 1.2260 (lower-limit of the descending channel).

The 1.2370 (20-period Simple Moving Average (SMA)) level aligns as immediate resistance before 1.2390/1.2400 (50-period SMA, psychological level). A four-hour close below the latter could attract buyers and pave the way for an extended upward correction toward 1.2450 (Fibonacci 23.6% retracement, 100-period SMA).

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.