GBP/USD Forecast: Pound Sterling's recovery attempts could remain short-lived

GBP/USD trades at fresh multi-month lows below 1.2400.
The near-term technical outlook suggests that the bearish bias stays intact.
The Fed and the BoE will announce policy decisions later this week.

Eren Sengezer FXStreet

GBP/USD lost nearly 100 pips last week and continued to stretch lower during the Asian trading hours on Monday. The pair was last seen trading at its lowest level since early June at around 1.2370. Investors, however, could stay on the sidelines ahead of this week's key macroeconomic events and make it difficult for GBP/USD to make a decisive move in either direction in the near term.

The unabated US Dollar (USD) strength last week forced GBP/USD to stay under bearish pressure. Early Monday, US stock index futures trade modestly higher, pointing to a slight improvement in risk sentiment. In case risk flows gain traction in the second half of the day, GBP/USD could erase some of last week's losses.

On Wednesday, the UK's Office for National Statistics will release Consumer Price Index (CPI) data ahead of the Bank of England's (BoE) monetary policy announcements on Thursday.

According to the results of the BoE's quarterly conducted survey, 40% of UK public said it would be best for the economy if interest rates went down, the highest share since 2008. Furthermore, medium-term inflation expectations ticked down to 2.9% from 3% in the previous survey.

The Federal Reserve (Fed) will also release the interest rate decision alongside the revised Summary of Projections on Wednesday.

GBP/USD Technical Analysis

In case GBP/USD fails to stabilize above 1.2380 (mid-point of the descending regression channel), sellers could remain interested. In that scenario, 1.2330 (lower limit of the descending channel) aligns as next support before 1.2300 (psychological level).

On the upside, 1.2400 (upper limit of the descending channel) could be seen as first resistance ahead of 1.2440 (static level) and 1.2470 (50-period Simple Moving Average).

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 treads water above 1.1850 amid thin trading

EUR/USD stays defensive but holds 1.1850 amid quiet markets in the European hours on Monday. The US Dollar is struggling for direction due to thin liquidity conditions as US markets are closed in observance of Presidents' Day.

GBP/USD flat lines as traders await key UK and US macro data

GBP/USD kicks off a new week on a subdued note and oscillates in a narrow range near 1.365 in Monday's European trading. The mixed fundamental backdrop warrants some caution for aggressive traders as the market focus now shifts to this week's important releases from the UK and the US.

Gold sticks to intraday losses; lacks follow-through

Gold remains depressed through the early European session on Monday, though it has managed to rebound from the daily trough and currently trades around the $5,000 psychological mark. Moreover, a combination of supporting factors warrants some caution for aggressive bearish traders, and before positioning for deeper losses.

Bitcoin consolidates as on-chain data show mixed signals

Bitcoin price has consolidated between $65,700 and $72,000 over the past nine days, with no clear directional bias. US-listed spot ETFs recorded a $359.91 million weekly outflow, marking the fourth consecutive week of withdrawals.

The week ahead: Key inflation readings and why the AI trade could be overdone

It is likely to be a quiet start to the week, with US markets closed on Monday for Presidents Day. European markets are higher across the board and gold is clinging to the $5,000 level after the tamer than expected CPI report in the US reduced haven flows to precious metals.

Monero Price Forecast: XMR risks a drop below $300 under mounting bearish pressure

Monero (XMR) starts the week under pressure, recording a 4% decline at press time on Monday after a 7% drop the previous day, putting the $300 support zone in focus.