GBP/USD forecast: Dips below 1.2300 handle might now be seen as a buying opportunity

  • Reviving safe-haven demand benefits USD and prompts some profit-taking.
  • Receding fears of a no-deal Brexit continues to underpin the British Pound.
  • Bulls seemed rather unimpressed by Tuesday mostly upbeat UK jobs data.

After an initial uptick, back closer to multi-week tops set in the previous session, the GBP/USD pair edged lower and dropped to the 1.2300 neighbourhood during the early European session on Tuesday. The intraday pullback lacked any obvious catalyst and could be solely attributed some profit-taking amid a slight deterioration in the global risk sentiment, which tends to benefit the US Dollar's relative safe-haven status against its British counterpart.

Brexit optimism remains supportive

However, the recent optimism over a softer Brexit, coupled with the fact that the UK lawmakers voted against the PM Boris Johnson's bid for an early election continued underpinning the British Pound and helped limit the downside. The UK Parliament has been prorogued for five-weeks to October 14, though any fresh political developments might continue to play a key role in driving the broader market sentiment surrounding the Sterling.
Meanwhile, data released this Tuesday showed that the UK average weekly earnings excluding bonuses ticked lower on expected lines and came in at 3.8% 3m/Yr as compared to 3.9% previous. However, wages including bonus rose 4.0% 3m/Yr in July and the unemployment rate fell to 3.8% during the reported month, both surpassing consensus estimates. Adding to this, the number of people claiming jobless benefits also matched market expectations and climbed to 28.2K in August from the previous month's downwardly revised reading of 19.8K (28K reported earlier), albeit did little to impress the GBP bulls or provide any meaningful impetus to the major.
There isn't any major market-moving US economic data due for release on Tuesday and hence, the pair seems more likely to enter a bullish consolidation phase and attempt to build on its recent recovery move from multi-year lows - sub-1.20 level tested at the beginning of this month.

Short-term technical outlook

Looking at the technical picture, nothing seems to have changed much for the pair and the near-term bias remains tilted in favour of bullish traders. Hence, any subsequent slide below 50-day SMA immediate support - around the 1.2300-1.2290 region - might attract some dip-buying interest near a short-term descending trend-line resistance breakpoint near the 1.2230-20 zone ahead of the 1.2200 round figure mark. On the flip side, the 1.2380-85 region now seems to have emerged as an immediate resistance, above which the pair seems all set to surpass the 1.2400 handle and aim towards challenging its next major hurdle near the 1.2435-40 region.




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.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Forex Analysis

Editors’ Picks

EUR/USD: Bulls in control above 1.1100 starting out ECB week

Following the bounce from near 1.1100 in early Asia, EUR/USD has entered a phase of consolidated near 1.1140 region ahead of the European open. Bulls await a fresh impetus for the next push above the 1.1150 mark ahead of Eurozone/ US PMIs.


GBP/USD recedes from three-week top above 1.2400, UK Manufacturing PMI eyed

GBP/USD prints three-day winning streak amid broad US dollar weakness. Calls of further help to British employees add to the upside momentum. Downbeat Brexit headlines confront the UK’s coronavirus optimism. The UK/US PMIs will join qualitative catalysts.


Trump tenderness, China's Caixin, boost Asia

Asia is off to a rollicking start to the week with equities performing strongly and currency markets rotating out of haven US Dollars. The turbocharging of bullish sentiment this morning has multiple drivers starting with President Donald Trump. 

Read more

Gold: Teasing a rectangle breakout, $1750 in sight

Gold bulls gathering pace for the next push higher. The extension of last week’s rally in the yellow metal is mainly driven by the sell-off in the US dollar across the board, in the wake of US-China trade war relief and escalating US riots.

Gold News

WTI: Overbought RSI challenges the bulls above $35.50

WTI seesaws around 7-week-old resistance line, retreats from highest since March 11. A short-term ascending trend line on the bears’ radars during the pullback. 100-day SMA, 61.8% Fibonacci retracement together offers strong upside barrier.

Oil News

Forex Majors