GBP/USD Forecast: Sellers eye 1.3160 as pound falls below 1.3200

GBP/USD stays under bearish pressure since failing to rise above key resistance.
1.3160 aligns as next target on the downside.
UK doesn't rule out additional restrictions heading into the holidays.

Eren Sengezer FXStreet

GBP/USD has dropped sharply on Friday and extended its slide early Monday as the pound remains on the back foot amid renewed concerns over the coronavirus Omicron variant weighing on the economic activity. The pair is currently trading below 1.3200 and shows no signs of a recovery.

On the week ending December 19, more than 140,000 cases of coronavirus got reported in London. British Deputy Prime Minister Dominic Raab noted that there were currently 104 patients in hospitals with the new Omicron variant and 12 fatalities.

Several news outlets reported that government scientists were concerned that the healthcare system in the UK would be overwhelmed if additional restriction measures were not introduced before the Christmas holiday.

In the absence of high-impact data releases, market participants will keep a close eye on fresh coronavirus-related developments. Markets remain risk-averse at the start of the week, making it difficult for the British pound to find demand. The UK's FTSE 100 Index is down more than 2% and the S&P Futures are losing 1.8%.

On the other hand, the greenback is staying relatively resilient against its rivals early Monday despite the fact that the 10-year US Treasury bond yield is losing more than 2% below 1.4%. Another selloff in US stocks could provide a boost to the dollar in the second half of the day and allow the bearish pressure surrounding GBP/USD to remain intact.

GBP/USD Technical Analysis

On the downside, the next static support is located at 1.3160. The Relative Strength Index (RSI) indicator on the four-hour chart is still above 30, suggesting that there is more room on the downside before the pair becomes technically oversold.

In case 1.3160 turns into resistance, additional losses toward 1.3135 (December 11, 2020, low) and 1.3100 (psychological level) could be witnessed.

On the flip side, 1.3240 (20-period SMA) aligns as the first hurdle ahead of 13260 (50-period SMA, 100-period SMA) and 1.3300 (psychological 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 holds losses near 1.1850 as US, China holidays keep trade muted

EUR/USD opens the week on a softer note, trading near 1.1860 during the Asian session on Monday. Activity is likely to remain muted, with United States markets closed for the Presidents’ Day holiday, while Mainland China is also shut for the week-long Lunar New Year break.

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

The GBP/USD pair kicks off a new week on a subdued note and oscillates in a narrow range, just below mid-1.3600s, during the Asian session. Moreover, 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 remains below $5,050 despite Fed rate cut bets, uncertain geopolitical tensions

Gold edges lower after registering over 2% gains in the previous session, trading around $5,030 per troy ounce during the Asian hours on Monday. However, the non-interest-bearing Gold could further gain ground following softer January Consumer Price Index figures, which reinforced expectations that the Federal Reserve could cut rates later this year.

Week ahead: Data blitz, Fed Minutes and RBNZ decision in the spotlight

The US jobs report for January, which was delayed slightly, didn’t do the dovish Fed bets any favours, as expectations of a soft print did not materialize, confounding the raft of weak job indicators seen in the prior week.

Global inflation watch: Signs of cooling services inflation

Realized inflation landed close to expectations in January, as negative base effects weighed on the annual rates. Remaining sticky inflation is largely explained by services, while tariff-driven goods inflation remains limited even in the US.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.