GBP/USD outlook: Pound extends weakness on signals of new COVID-19 restrictions

Slobodan Drvenica Windsor Brokers

GBP/USD

Cable lost traction and fell to new December’s low in December, coming under fresh pressure on reports that new Covid rules in the UK are imminent.

Media reports suggest that PM Johnson could introduce new restrictions to curb the spread of new Omicron variant, with new measures to be implemented as early as tomorrow.

This would further weaken the pound ahead of highly anticipated BoE policy meeting next week.

Some policymakers say not sure on how they will vote, although expectations for a rate hike on surging inflation are still high, despite official consensus of economists for unchanged policy.

The central bank expects price pressures to continue to increase in the first half of 2022, seeing inflation above 5% before it starts easing.

Pound will likely rise if the BoE opts to increase interest rates on Dec 16 meeting, but may lose ground if BoE surprises again.

The pair is pressuring a key supports at 1.3160 zones (Fibo 38.2% of 1.1409.1.4249 rally / 200WMA) break of which would result in a sub-1.30 drop.

The base of thick weekly cloud offers strong resistance at 1.3250 which should cap and keep bears firmly in play.

Res: 1.3250; 1.3275; 1.3345; 1.3358.
Sup: 1.3160; 1.3134; 1.3100; 1.3046.

Interested in GBP/USD technicals? Check out the key levels

1. R3 1.3365
2. R2 1.3327
3. R1 1.3285
PP 1.3247
1. S1 1.3205
2. S2 1.3167
3. S3 1.3125

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

EUR/USD rises to 1.1800 neighborhood amid renewed USD selling and trade uncertainties

The EUR/USD pair regains positive traction during the Asian session on Wednesday and jumps to the 1.1800 neighborhood in the last hour, reversing the previous day's modest losses. The intraday move up is sponsored by the emergence of fresh US Dollar, which continues to be weighed down by persistent trade-related uncertainties.

GBP/USD remains stronger above 1.3500 following Trump’s State of the Union

GBP/USD remains in the positive territory for the fourth successive session, trading around 1.3510 during the Asian hours on Wednesday. The pair appreciates as the US Dollar remains subdued following US President Donald Trump’s first State of the Union address of his second administration before a joint session of Congress.

Gold stays firm above $5,150 as Trump's delivers State of the Union speech

Gold finds fresh demand and regains the $5,150 level following the previous day's pullback from the monthly peak as traders assess Trump's State of the Union address. Trade-related uncertainties and geopolitical risks seem to act as a tailwind for the safe-haven bullion.

Bitcoin, Ethereum and Ripple post cautious recovery amid downside risks

Bitcoin, Ethereum, and Ripple are posting a cautious recovery on Wednesday following a market correction earlier this week. BTC is approaching a key breakdown level, while ETH and XRP are rebounding from crucial support levels.

The Citrini report: How a debatable AI narrative can shake Wall Street

That AI-related headline alone was enough to rattle investors.US stocks slid sharply on Monday after a widely circulated Citrini Research memo outlined a hypothetical “2028 Global Intelligence Crisis”, warning that rapid AI adoption could push US unemployment into double digits as early as by mid-2028.

XRP pressured by weak ETF flows and declining retail interest

Ripple (XRP) is edging lower, trading above its intraday low of $1.32 at the time of writing on Tuesday. The decline from its weekly opening of $1.39 reflects heightened volatility in the broader cryptocurrency market, accentuated by tariff-triggered uncertainty.