GBP/USD Forecast: Pound Sterling faces next key support at 1.2260

GBP/USD has advanced above 1.2300 following the decline in Asian session.
Sellers could take action if the pair drops below 1.2260.
Investors are concerned above energy inflation on rising crude oil prices.

Eren Sengezer FXStreet

GBP/USD has started the new week under bearish pressure and declined below 1.2300 before staging a rebound in the European morning. The pair could have a difficult time regaining its traction unless the market mood improves later in the day.

Investors are concerned about rising crude oil prices causing energy inflation to remain uncomfortably high. The decision by some OPEC+ producers to voluntarily reduce output by a total of more than 1 million barrels per day until the end of the year caused crude oil prices to surge higher at the beginning of the week. The barrel of Brent was last seen rising more than 6% on the day at $84.50.

In case safe-haven flows drive the action in financial markets in the second half of the day, the US Dollar could continue to gather strength and weigh on GBP/USD. As of writing, S&P 500 Futures were down 0.15% on the day while Dow Futures were up 0.3%.

Meanwhile, the CME Group FedWatch Tool shows that the probability of a 25 basis points Federal Reserve (Fed) rate hike in May rose above 60% from 48% on Friday.

Later in the day, hawkish Fed bets could help the USD find demand in case the ISM Manufacturing PMI survey reveals an increase in the sector's input inflation. The Priced Paid Index is forecast to edge higher to 53.8 in March from 51.3 in February. On the flip side, a decisive rebound above 50 in the headline PMI, which is expected to come in at 47.5, could help the risk sentiment to improve and limit the USD's upside.

GBP/USD Technical Analysis

In case GBP/USD confirms 1.2300 as resistance, the next key support is located at 1.2260 (Fibonacci 23.6% retracement) before 1.2230 (100-period Simple Moving Average (SMA)) and 1.2200 (psychological level).

On the upside, 1.2350 (static level, 20-period SMA), aligns as first resistance ahead of 1.2400 (end-point of the latest uptrend) and 1.2420 (multi-month high set on March 31).

It's worth noting that the Relative Strength Index (RSI) indicator on the four-hour chart struggles to rise above 50, highlighting buyers' hesitancy for the time being.

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 extends its optimism past 1.1900

EUR/USD retains a firm underlying bid, surpassing the 1.1900 mark as the NA session draws to a close on Monday. The pair’s persistent uptrend comes as the US Dollar remains on the defensive, with traders staying cautious ahead of upcoming US NFP prints and CPI data.

GBP/USD hits three-day peaks, targets 1.3700

GBP/USD is clocking decent gains at the start of the week, advancing to three-day highs near 1.3670 and building on Friday’s solid performance. The better tone in the British Pound comes on the back of the intense sekk-off in the Greenback and despite re-emerging signs of a fresh government crisis in the UK.

Gold pushes back above $5,000

The daily chart shows spot Gold in a parabolic uptrend that accelerated sharply from the $4,600 area in late January, printing a record high at $5,598.25 before a violent reversal erased nearly $1,000 in value during the final days of the month.

Litecoin eyes $50 as heavy losses weigh on investors

Following a strong downtrend across the crypto market over the past week, Litecoin holders are under immense pressure. The Bitcoin fork has trimmed about $1.81 billion from its market capitalization since the beginning of the year, sending it below the top 20 cryptos by market cap.

Japanese PM Takaichi nabs unprecedented victory – US data eyed this week

I do not think I would be exaggerating to say that Japanese Prime Minister Sanae Takaichi’s snap general election gamble paid off over the weekend – and then some. This secured the Liberal Democratic Party (LDP) an unprecedented mandate just three months into her tenure.

Ripple exposed to volatility amid low retail interest, modest fund inflows

Ripple (XRP) is extending its intraday decline to around $1.40 at the time of writing on Monday amid growing pressure from the retail market and risk-off sentiment that continues to keep investors on the sidelines.