GBP/USD Forecast: Sellers look to retain control as Pound Sterling stays below key hurdle
- GBP/USD recovered modestly early Monday, following a two-day decline.
- Pound Sterling needs to reclaim 1.2200-1.2210 to attract buyers.
- The pair's upside is likely to remain limited in the near term.
GBP/USD closed the last two trading day of the previous week in negative territory. Although the pair managed to stage a modest rebound early Monday, it failed to gather momentum.
The risk-averse market atmosphere ahead of the weekend forced GBP/USD to stay on the back foot. Meanwhile, the University of Michigan's Consumer Sentiment Survey, which revealed a significant increase in the one-year inflation expectation component, provided an additional boost to the US Dollar (USD). Following this report, the probability of the Federal Reserve (Fed) raising the policy rate one more time in December declined to 67% from nearly 75% earlier in the week.
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 Australian Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.18% | -0.05% | -0.01% | -0.22% | -0.06% | -0.22% | 0.03% | |
| EUR | 0.16% | 0.11% | 0.15% | -0.06% | 0.10% | -0.05% | 0.18% | |
| GBP | 0.06% | -0.16% | 0.01% | -0.20% | 0.00% | -0.19% | 0.06% | |
| CAD | 0.01% | -0.15% | 0.02% | -0.20% | -0.04% | -0.19% | 0.05% | |
| AUD | 0.22% | 0.05% | 0.17% | 0.20% | 0.16% | 0.00% | 0.22% | |
| JPY | 0.07% | -0.09% | 0.01% | 0.03% | -0.15% | -0.16% | 0.10% | |
| NZD | 0.20% | 0.02% | 0.14% | 0.19% | -0.02% | 0.14% | 0.20% | |
| CHF | -0.02% | -0.18% | -0.05% | -0.05% | -0.23% | -0.07% | -0.23% |
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).
Markets seem to have adopted a cautious stance to start the new week as tensions in the Middle East continue to rise amid the deepening Israel-Hamas conflict.
In case safe-haven flows continue to dominate the markets in the second half of the day, the USD could stay resilient against its rivals and make it difficult for GBP/USD to gain traction. A positive shift in market mood could help GBP/USD edge higher but investors could refrain from betting on a steady improvement in risk sentiment.
Early Tuesday, the UK's Office for National Statistics will release wage inflation data for August.
GBP/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart stays below 50, highlighting a lack of recovery momentum. On the downside, near-term static support seems to have formed at 1.2130 ahead of 1.2100 (psychological level, static level) and 1.2050 (end-point of the latest downtrend).
GBP/USD faces strong resistance in the 1.2200 - 1.2210 area, where the Fibonacci 23.6% retracement, the 50-period and the 100-period Simple Moving Averages (SMA) are located. If the pair clears that hurdle, 1.2250 (static level) and 1.2300 (Fibonacci 38.2% retracement) could be set as next recovery targets.
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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.
