GBP/USD Forecast: Pound Sterling could correct lower in case 1.2800 stays intact

GBP/USD extended rally to multi-year tops above 1.2900 on Friday.
The risk-positive market atmosphere helps the pair cling to weekly gains.
Overbought conditions could pave the way to profit-taking ahead of the weekend.

Eren Sengezer FXStreet

GBP/USD gained more than 100 pips on Thursday and continued to edge up early Friday, reaching its highest level since April 2022 at 1.2818. The pair stays overbought in the short term and profit-taking ahead of the weekend could make it difficult for Pound Sterling to gather strength later in the day.

Persistent selling pressure surrounding the US Dollar (USD) fuelled the pair's upsurge on Thursday. There were 262,000 applications for unemployment benefits in the week ending June 10, the US Department of Labor reported, causing investors to reassess the possibility of one more Federal Reserve rate hike in July. Additionally, the risk-positive market environment – as reflected by sharp increases seen in Wall Street's main indexes – further weighed on the safe-haven USD.

Early Friday, US stock index futures trade modestly higher. The UK's FTSE 100 Index, however, erased a large portion of the opening gains, pointing to a cautious stance.

In the second half of the day, market participants will pay close attention to comments from Fed officials. Governor Christopher Waller is scheduled to deliver a speech at 11:45 GMT. The market positioning suggests that the USD could rebound if Fed officials hint at a return to rate hikes in July. According to the CME Group FedWatch Tool, markets are pricing in a 74% probability of the Fed raising the policy rate by 25 bps in July.

GBP/USD is already up 1.7%, or more than 200 pips, this week. Investors could look to book profits heading into the weekend, opening the door to a downward correction in GBP/USD.

GBP/USD Technical Analysis

GBP/USD fluctuates outside the ascending regression channel and the Relative Strength Index (RSI) indicator on the four-hour chart stays above 70, confirming overbought conditions.

1.2750 (static level, upper-limit of the ascending channel) aligns as first support ahead of 1.2700 (static level, psychological level) and 1.2670 (20-period Simple Moving Average (SMA), mid-point of the ascending channel).

On the upside, 1.2860 (static level from October 2020) and 1.2900 (psychological level, static level) could be set as next bullish targets once GBP/USD stabilizes above 1.2800 and starts using that level as support.

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 flirts with daily highs, retargets 1.1900

EUR/USD regains upside traction, returning to the 1.1880 zone and refocusing its attention to the key 1.1900 barrier. The pair’s slight gains comes against the backdrop of a humble decline in the US Dollar as investors continue to assess the latest US CPI readings and the potential Fed’s rate path.

GBP/USD remains well bid around 1.3650

GBP/USD maintains its upside momentum in place, hovering around daily highs near 1.3650 and setting aside part of the recent three-day drop. Cable’s improved sentiment comes on the back of the Greenback’s irresolute price action, while recent hawkish comments from the BoE’s Pill also collaborate with the uptick.

Gold clings to gains just above $5,000/oz

Gold is reclaiming part of the ground lost on Wednesday’s marked decline, as bargain-hunters keep piling up and lifting prices past the key $5,000 per troy ounce. The precious metal’s move higher is also underpinned by the slight pullback in the US Dollar and declining US Treasury yields across the curve.

Crypto Today: Bitcoin, Ethereum, XRP in choppy price action, weighed down by falling institutional interest

Bitcoin's upside remains largely constrained amid weak technicals and declining institutional interest. Ethereum trades sideways above $1,900 support with the upside capped below $2,000 amid ETF outflows.

Week ahead – Data blitz, Fed Minutes and RBNZ decision in the spotlight

US GDP and PCE inflation are main highlights, plus the Fed minutes. UK and Japan have busy calendars too with focus on CPI. Flash PMIs for February will also be doing the rounds. RBNZ meets, is unlikely to follow RBA’s hawkish path.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.