GBP/USD consolidates in a range below mid-1.2200s, seems vulnerable near multi-month low

GBP/USD enters a bearish consolidation phase near a multi-month low touched last Friday.
The USD continues to draw support from the Fed's hawkish outlook and acts as a headwind.
The BoE's surprise pause is seen undermining the GBP and contributes to capping the upside.

Haresh Menghani FXStreet

The GBP/USD pair is seen oscillating in a narrow trading band during the Asian session on Monday and consolidating its recent losses to the lowest level since late March touched last week. Spot prices currently trade just below mid-1.2200s and seem vulnerable to prolonging a well-established downtrend from the 1.3140 area, or a 15-month peak touched on July 14.

The US Dollar (USD) stands tall near its highest level in more than six months and remains well supported by the Federal Reserve's (Fed) hawkish stance, which, in turn, is seen as a key factor acting as a headwind for the GBP/USD pair. The Fed emphasized the need to keep interest rates higher for longer to push inflation back to the 2% target and lifted market bets for at least one more 25 bps lift-off by the year-end. Moreover, the so-called 'dot-plot' suggested just two rate cuts in 2024 as compared to four projected previously.

The outlook pushed the yield on the benchmark 10-year US government bond to its highest level since 2007, which, along with a generally weaker risk tone, continues to underpin the safe-haven Greenback. Apart from this, the Bank of England's (BoE) surprise pause last Thursday contributes to the British Pound's (GBP) relative underperformance and is seen as another factor weighing on the GBP/USD pair. In fact, the UK central bank ended a run of 14 straight interest rate hikes in the wake of the recent deceleration of inflation.

The aforementioned fundamental backdrop seems tilted firmly in favour of bullish traders and suggests that the path of least resistance for the GBP/USD pair is to the downside. That said, the Relative Strength Index (RSI) on the daily chart is flashing oversold conditions and warrants some caution. In the absence of any relevant macro releases, either from the UK or the US, this makes it prudent to wait for some near-term consolidation or a modest bounce before traders start positioning for any further depreciating move.

Technical levels to watch

GBP/USD

Overview
Today last price	1.2245
Today Daily Change	0.0005
Today Daily Change %	0.04
Today daily open	1.224

Trends
Daily SMA20	1.249
Daily SMA50	1.2666
Daily SMA100	1.2643
Daily SMA200	1.2434

Levels
Previous Daily High	1.2302
Previous Daily Low	1.2231
Previous Weekly High	1.2425
Previous Weekly Low	1.2231
Previous Monthly High	1.2841
Previous Monthly Low	1.2548
Daily Fibonacci 38.2%	1.2258
Daily Fibonacci 61.8%	1.2275
Daily Pivot Point S1	1.2213
Daily Pivot Point S2	1.2187
Daily Pivot Point S3	1.2143
Daily Pivot Point R1	1.2284
Daily Pivot Point R2	1.2328
Daily Pivot Point R3	1.2355

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

GBP/USD bounces to 1.3550 on USD retreat

GBP/USD rebounds to test 1.3550 at the start of a new week, reversing a part of Friday's heavy losses to over a one-week trough. The pair draws support from renewed US Dollar weakness, but lacks bullish conviction amid looming US-Iran geopolitical risks.

EUR/USD edges higher to near 1.1600 ahead of German CPI data

EUR/USD gathers strength to near 1.1600 in European trading hours on Monday. The US Dollar pulls back despite hawkish remarks from Federal Reserve Chair Kevin Warsh. Traders will now take cues from the preliminary reading of Consumer Price Index inflation data from Germany, which is due later on Monday.

Gold holds recovery near $4,450; still cautious

Gold holds its recovery near $4,450 in the European session on Monday, moving away from sub-$4,400 levels, though the upside potential seems limited. A softer US Dollar offers some support to the precious metal and helps recover its intraday losses. Meanwhile, Fed Chair Kevin Warsh's comments on curbing inflationary pressures on Friday lifted bets for a rate hike, which might keep a lid on any meaningful recovery for the non-yielding bullion.

Dogecoin whales take profits as rally loses momentum

Dogecoin trades near key support around $0.081 after declining more than 12% last week. On-chain data suggests some whale wallets are taking profits after DOGE’s recent surge. Meanwhile, derivatives data points to mild underlying strength, while technical indicators suggest bullish momentum is losing strength, leaving the meme coin’s near-term outlook mixed.

Iran’s IRGC claims it shot down US drone, attacked UAE air base

Iran’s Islamic Revolutionary Guard Corps (IRGC) shot down a US MQ-9 drone over the Strait of Hormuz using air defense missiles, causing it to crash into Gulf waters, Mehr news agency reported on Monday.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.