- GBP/USD has started to edge lower toward the lower limit of trading range.
- Renewed dollar strength is weighing on the pair ahead of the New Year holiday.
- UK PM Johnson will reportedly assess Omicron data next Monday.
GBP/USD has reversed its direction after climbing to its highest level in more than a month at 1.3463 on Tuesday. The pair is closing in on key 1.3400 support and additional losses could be witnessed if buyers fail to defend that level.
The negative shift witnessed in market sentiment seems to be weighing on GBP/USD early Wednesday by providing a boost to the safe-haven greenback. The number of new Coronavirus cases globally is rising at an unprecedented pace and investors grow increasingly concerned about the potential negative impact on the economic activity.
Scotland, Wales and Northern Ireland have already announced additional restrictions focusing on indoor gatherings but several news outlets reported that British Prime Minister Boris Johnson will assess the latest data next Monday. On Tuesday, the UK reported nearly 130,000 new cases.
There won't be any high-tier macroeconomic data releases in the remainder of the week and investors could opt to stay away from risk assets heading into the New Year.
GBP/USD Technical Analysis
With the sharp decline witnessed late Tuesday, GBP/USD broke below the ascending trend line coming from December 21. Additionally, the Relative Strength Index (RSI) indicator on the four-hour chart returned to 50, confirming the view that the pair has lost its bullish momentum.
On the downside, the lower-limit of the weekly trading range is forming key support at 1.3400. In case this level turns into resistance, additional losses toward 1.3370 (former resistance) could be witnessed before 1.3330 (200-period SMA).
The 20-period SMA acts as interim resistance at 1.3420 before 1.3460 (static level) and 1.3500 (psychological level).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.