GBP/USD Forecast: Pound Sterling turns fragile as safe-haven flows return

GBP/USD declined to the 1.2300 area in the European morning on Tuesday.
The US Dollar gathers strength amid souring market mood.
Sellers could remain interested in case GBP/USD fails to stabilize above 1.2300.

Eren Sengezer FXStreet

GBP/USD came under pressure and declined to the 1.2300 area in the European session on Tuesday. The pair's near-term technical outlook points to a bearish tilt. In the absence of high-impact data releases, the risk perception could impact GBP/USD action in the second half of the day.

After advancing to its strongest level since mid-September at 1.2428 on Monday, GBP/USD turned south and closed in negative territory. The recovery seen in the US Treasury bond yields helped the US Dollar (USD) find demand and didn't allow the pair to build on earlier gains.

At the time of press, US stock index futures were down around 0.3% on the day, reflecting a cautious market stance. In case safe-haven flows dominate the action following Wall Street's opening bell, the USD could continue to gather strength and force GBP/USD to stay on the back foot.

News of the UN Security Council failing to reach an agreement on a draft resolution to end the conflict in Gaza seem to be causing investors to stay away from risk-sensitive assets.

Earlier in the day, the data from the UK revealed that Halifax House Prices rose by 1.1% on a monthly basis in October but this reading did not trigger a noticeable market reaction.

GBP/USD Technical Analysis

GBP/USD was last seen trading within a touching distance of 1.2300, where the Fibonacci 38.2% retracement of the latest downtrend and the 20-period Simple Moving Average (SMA) on the 4-hour chart align. If the pair drops below that level and confirms it as resistance, additional losses toward 1.2260 (static level) and 1.2200 (Fibonacci 23.6% retracement, 50-period SMA) could be witnessed.

On the upside, resistances are located at 1.2340 (static level), 1.2400 (Fibonacci 50% retracement) and 1.2440 (static level).

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 faces next resistance near 1.1930

EUR/USD continues to build on its recovery in the latter part of Wednesday’s session, with upside momentum accelerating as the pair retargets the key 1.1900 barrier amid a further loss of traction in the US Dollar. Attention now shifts squarely to the US data docket, with labour market figures and the always influential CPI releases due on Thursday and Friday, respectively.

GBP/USD sticks to the bullish tone near 1.3660

GBP/USD maintains its solid performance on Wednesday, hovering around the 1.3660 zone as the Greenback surrenders its post-NFP bounce. Cable, in the meantime, should now shift its attention to key UK data due on Thursday, including preliminary GDP gauges.

Gold holds on to higher ground ahead of the next catalyst

Gold keeps the bid tone well in place on Wednesday, retargeting the $5,100 zone per troy ounce on the back of modest losses in the US Dollar and despite firm US Treasury yields across the curve. Moving forward, the yellow metal’s next test will come from the release of US CPI figures on Friday.