GBP/USD Forecast: Pressure mounts, 1.2300 in sight

Valeria Bednarik FXStreet

GBP/USD Current price: 1.2418

The Bank of England expanded its APP program by £100 billion to £745 billion as expected.
UK Retail Sales are expected to have surged by 5.7% MoM in May.
GBP/USD is trading at daily lows and with the risk still skewed to the downside.

The GBP/USD pair enjoyed a short-lived boost from the BOE Monetary Policy announcement this Thursday, but quickly changed course and fell to its lowest since June 1^st. The Bank of England expanded its Assets Purchase Programme by £100 billion to £745 billion as expected, leaving rates on hold at a record low of 0.1%. BOE’s Governor Andrew Bailey said that the decision on negative rate is not in any sense imminent. He also said that “evidence suggests economic downturn has not been as severe as in May scenario but let's not get carried away." The GBP/USD pair advanced towards 1.2560 but was unable to hold on to gains, accelerating its decline during US trading hours amid resurgent demand for the safe-haven dollar.

This Friday, the UK will publish Publish Sector Net Borrowing, foreseen at £47.3 B in May, and Retail Sales for the same month, expected to have fallen by 17.1% from a year earlier but up in the month 5.7%.

GBP/USD short-term technical outlook

The GBP/USD pair hovers around 1.2410 as the day comes to an end, trading a handful of pips above its daily low. The 4-hour chart shows that the pair plunged below its 20 and 100 SMA, with the shortest about to break below the larger ones, as the price is stuck around a directionless 200 SMA. Technical indicators remain at daily lows, partially losing their bearish strength but still heading south, in line with further declines ahead.

Support levels: 1.2385 1.2340 1.2300

Resistance levels: 1.2450 1.2490 1.2530

View Live Chart for the GBP/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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