GBP/USD Forecast: Near-term correction with bulls still in charge
GBP/USD Current price: 1.2646
- S&P Global upwardly revised the November United Kingdom Manufacturing PMI.
- Hawkish comments from Bank of England officials underpin the British Pound.
- GBP/USD aims south near term, but remains bullish on the broader picture.
GBP/USD is in better shape ahead on Friday, recovering from the 1.2603 low posted on Thursday. Hawkish comments from Bank of England (BoE) officials underpinned the Pound. Monetary Policy Committee (MPC) member Megan Greene said monetary policy will need to be restrictive for an extended period to achieve the central bank’s 2% inflation target. Greene also expressed concerns about inflation persistence. Additionally, BoE MPC Jonathan Haskel noted that low unemployment may keep interest rates high.
Data-wise, the United Kingdom (UK) published the Nationwide Housing Prices report, which rose 0.2% MoM in November, beating expectations. At the same time, S&P Global unveiled the final estimate of the November Manufacturing PMI, upwardly revised to 47.2 from a preliminary estimate of 46.7.
GBP/USD short-term technical outlook
The GBP/USD pair daily chart shows that it trades around 1.2650 after peaking at 1.2674 in mid-European morning. The pair develops well above its moving averages, with the 20 Simple Moving Average aiming to cross above directional 100 and 200 SMAs, usually a sign of strong buying interest. At the same time, technical indicators retreated from overbought readings but lost their downward strength within positive levels, reflecting limited selling interest.
In the near term, and according to the 4-hour chart, the risk skews to the downside. A flat 20 SMA caps the upside at around 1.2675, although the 100 SMA maintains its bullish slope far below the current level. Finally, technical indicators head south, with the Momentum indicator accelerating lower below its 100 line and the Relative Strength Index (RSI) indicator holding within neutral levels. A steeper decline could be expected on a break below 1.2605, the immediate support level.
Support levels: 1.2605 1.2570 1.2525
Resistance levels: 1.2680 1.2730 1.2780
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Author
Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.
