GBP/USD Forecast: Sellers look to retain control as Pound Sterling falls below key support
- GBP/USD came under pressure and declined below 1.2650.
- The technical outlook points to a buildup of bearish momentum.
- The USD could preserve its strength in case mood continues to sour.
GBP/USD lost its traction and dropped below 1.2650 early Wednesday following Tuesday's choppy action. The pair's technical picture highlights a bearish tilt in the short term.
The US Dollar (USD) found a foothold in the second half of the day on Tuesday as US Treasury bond yields edged higher and Wall Street's main indexes failed to gather bullish momentum.
US stock index futures are down between 0.2% and 0.4% early Wednesday and the UK's FTSE 100 Index is losing 0.3% in the early trade, highlighting a cautious market stance midweek. If US stocks push lower after the opening bell, the USD could benefit from risk-aversion and weigh on GBP/USD.
Pound Sterling price today
The table below shows the percentage change of Pound Sterling (GBP) against listed major currencies today. Pound Sterling was the weakest against the US Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.32% | 0.37% | 0.32% | 0.68% | 0.19% | 1.06% | 0.21% | |
| EUR | -0.29% | 0.08% | 0.01% | 0.39% | -0.13% | 0.77% | -0.10% | |
| GBP | -0.37% | -0.07% | -0.06% | 0.30% | -0.19% | 0.69% | -0.19% | |
| CAD | -0.32% | -0.04% | 0.06% | 0.36% | -0.13% | 0.75% | -0.09% | |
| AUD | -0.70% | -0.39% | -0.32% | -0.38% | -0.51% | 0.38% | -0.48% | |
| JPY | -0.19% | 0.10% | 0.17% | 0.12% | 0.52% | 0.87% | 0.02% | |
| NZD | -1.08% | -0.77% | -0.69% | -0.76% | -0.39% | -0.89% | -0.86% | |
| CHF | -0.21% | 0.11% | 0.16% | 0.10% | 0.49% | -0.02% | 0.85% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
The US economic docket will feature the second estimate of the annualized Gross Domestic Product (GDP) for the fourth quarter later in the day. Markets don't expect a revision to the 3.3% growth announced in the initial estimate. While a downward revision could have a short-lasting negative impact on the USD's valuation, investors are unlikely to reconsider Federal Reserve (Fed) policy outlook based on this data alone.
According to the CME FedWatch Tool, markets fully price in a no change in the policy rate in March and see an 85% probability for another hold in May.
Later in the American session, several Fed policymakers will be delivering speeches. On Thursday, the US Bureau of Economic Analysis (BEA) will release Personal Consumption Expenditures (PCE) Price Index data for January.
GBP/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart dropped below 50 and GBP/USD broke below the ascending trend line and the 200-period Simple Moving Average (SMA), highlighting a buildup of bearish momentum.
1.2620 (100-period SMA) aligns as first support before 1.2600 (static level, psychological level) and 1.2540 (Fibonacci 38.2% retracement of the long-term uptrend). On the upside, 1.2660-1.2650 (200-period SMA, ascending trend line, Fibonacci 23.6% retracement of the long-term uptrend) aligns as strong resistance area before 1.2700 (psychological level, static level).
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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.
