GBP/USD Forecast: Pound Sterling faces next key support at 1.2560
- GBP/USD started to move sideways near 1.2600 following a two-day slide.
- Next key support for the pair is located at 1.2560.
- ADP Employment Change data from the US will be watched closely by investors.
GBP/USD declined for the second consecutive on Tuesday before going into a consolidation phase at around 1.2600 early Wednesday. As market participants await the ADP Employment Change data from the US, the pair's technical outlook points to a bearish bias in the near term.
The US Dollar (USD) continued to outperform its rivals on Tuesday as the market mood remained risk-averse amid a lack of de-escalation in geopolitical tensions in the Middle East. In the meantime, latest data releases from the US revealed that the service sector's business activity continued to expand at an accelerating pace in November, while the number of job openings declined more than expected from September to October.
Pound Sterling price this week
The table below shows the percentage change of Pound Sterling (GBP) against listed major currencies this week. Pound Sterling was the weakest against the US Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.88% | 0.87% | 0.70% | 1.62% | 0.58% | 1.07% | 0.82% | |
| EUR | -0.90% | 0.01% | -0.17% | 0.76% | -0.31% | 0.22% | -0.05% | |
| GBP | -0.90% | 0.01% | -0.17% | 0.76% | -0.30% | 0.23% | -0.05% | |
| CAD | -0.71% | 0.17% | 0.18% | 0.93% | -0.15% | 0.39% | 0.12% | |
| AUD | -1.65% | -0.77% | -0.76% | -0.94% | -1.08% | -0.54% | -0.82% | |
| JPY | -0.61% | 0.33% | 0.48% | 0.15% | 1.08% | 0.53% | 0.25% | |
| NZD | -1.09% | -0.20% | -0.21% | -0.37% | 0.55% | -0.51% | -0.26% | |
| CHF | -0.85% | 0.05% | 0.05% | -0.12% | 0.80% | -0.25% | 0.26% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Later in the day, ADP Employment Change data could impact the USD's valuation. Analysts forecast a growth 130,000 in the private sector's employment. A print below 100,000 could confirm looses labor market conditions and weigh on the USD.
Investors will also keep a close eye on the performance of US stocks. At the time of press, US stock index futures were up between 0.1% and 0.3%. A bullish opening in Wall Street could attract risk flows and make it difficult for the USD to find demand.
GBP/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart declined toward 40, pointing to a buildup of bearish momentum. Once GBP/USD confirms 1.2600 (psychological level, static level) as resistance, 1.2560 (100-period Simple Moving Average (SMA), Fibonacci 23.6% retracement of the latest uptrend) could be seen as next bearish target before 1.2500 (psychological level, static level).
If GBP/USD stabilizes above 1.2600, resistances align at 1.2650 (50-period SMA) and 1.2700 (psychological level, static level).
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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.
