GBP/USD outlook: Sterling falls to new multi-year low after disappointing data

Slobodan Drvenica Windsor Brokers

GBP/USD

Cable accelerates below 1.12 mark on Friday and hit new lowest since 1985, in extension of steep bear-leg from 1.1738 (Sep 13 lower top), which is a part of larger downtrend from 1.4249 (June 2021 peak.

The action in Asian and early European trading has registered a fall of 0.8%, as the pair is on track for a second straight significant weekly loss (over 2% so far).

Persisting safe haven flows on fears of escalation geopolitical situation, weakening economy and signals that the Fed will remain aggressive regarding its monetary policy, continue to deflate pound.

The latest economic data from UK, further weakened the sentiment as services PMI fell below 50 threshold in September (49.2 vs 50.9 in Aug) with Sep figure being the lowest since January 2021, while manufacturing sector performed better than expected in September (48.5 vs 47.3 f/c) but stays in the territory that points to contraction.

Weak fundamentals complement to bearish technical studies, signaling further weakness, with psychological 1.10 support being in focus, with risk of acceleration towards Feb 1985 low at 1.0520.

Meanwhile, bears may take a breather on oversold conditions on daily and weekly chart, with upticks to be capped under strong barrier at 1.1410 (falling 10DMA / Mar 2020 low) to offer better selling opportunities.

Res: 1.1273; 1.1305; 1.1364; 1.1410.
Sup: 1.1150; 1.1100; 1.1072; 1.1000.

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

1. R3 1.1497
2. R2 1.1431
3. R1 1.1345
PP 1.1278
1. S1 1.1193
2. S2 1.1126
3. S3 1.104

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 holds lower ground near 1.1850 ahead of EU/ US data

EUR/USD remains in the negative territory for the fourth successive session, trading around 1.1850 in European trading on Friday. A broadly cautious market environment paired with modest US Dollar demand undermines the pair ahead of the Eurozone GDP second estimate and the critical US CPI data.

GBP/USD keeps losses around 1.3600, awaits US CPI for fresh impetus

GBP/USD holds moderate losses at around 1.3600 in the European session on Friday, though it lacks bearish conviction. The US Dollar remains supported amid softer risk tone and ahead of the US consumer inflation figures due later in the NA session on Friday.

Gold trims intraday gains to $5,000 as US inflation data loom

Gold retreats from the vicinity of the $5,000 psychological mark, though sticks to its modest intraday gains heading into the European session. Traders now look forward to the release of the US consumer inflation figures for more cues about the Fed policy path. The outlook will play a key role in influencing the near-term US Dollar price dynamics and provide some meaningful impetus to the non-yielding bullion.

US CPI data set to show modest inflation cooling as markets price in a more hawkish Fed

The US Bureau of Labor Statistics will publish January’s Consumer Price Index data on Friday, delayed by the brief and partial United States government shutdown. The report is expected to show that inflationary pressures eased modestly but also remained above the Federal Reserve’s 2% target.

A tale of two labour markets: Headline strength masks underlying weakness

Undoubtedly, yesterday’s delayed US January jobs report delivered a strong headline – one that surpassed most estimates. However, optimism quickly faded amid sobering benchmark revisions.

Solana Price Forecast: Mixed market sentiment caps recovery

Solana (SOL) is trading at $79 as of Friday, following a correction of over 9% so far this week. On-chain and derivatives data indicates mixed sentiment among traders, further limiting the chances of a price recovery.