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GBP/USD hangs near its lowest level since early May, seems vulnerable below 1.2700

  • GBP/USD is seen consolidating its recent losses to over a one-month low touched on Friday. 
  • The Fed’s hawkish outlook continues to underpin the USD and exerts pressure on the major.
  • The divergent Fed-BoE policy expectations could lend some support and limit deeper losses.

The GBP/USD pair struggles to capitalize on Friday's modest bounce from the vicinity of mid-1.2600s or a nearly one-month low and oscillates in a narrow band on the first trading day of a new week. Spot prices now seem to have found acceptance below the 1.2700 round-figure mark and could decline further amid a bullish sentiment surrounding the US Dollar (USD). 

In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, stands tall near its highest level since early May touched on Friday in the wake of the Federal Reserve's (Fed) hawkish surprise last week. In the so-called "dot plot", policymakers projected only one interest rate cut in 2024 as compared to three in March. This remains supportive of elevated US Treasury bond yields and acts as a tailwind for the buck, validating the negative outlook for the GBP/USD pair. 

That said, weaker-than-expected US consumer and producer prices data released last week pointed to signs of easing inflationary pressures. Adding to this, an unexpected fall in the US import prices further boosted the domestic inflation outlook, which, along with a sharp deterioration in the US consumer sentiment in June, keeps hopes alive for the first Fed rate cut move in September and the second cut in December. This might cap gains for the USD and help limit losses for the GBP/USD pair. 

Market participants, meanwhile, expect that more persistent price pressures in the UK might force the Bank of England (BoE) to keep interest rates at their current level for a little bit longer. This might hold back bearish traders from placing aggressive bets around the British Pound (GBP) ahead of this week's release of the UK CPI report. Moreover, the upcoming UK general election on July 4 warrants some caution before positioning for any further depreciating move for the GBP/USD pair.

GBP/USD

Overview
Today last price1.2684
Today Daily Change-0.0002
Today Daily Change %-0.02
Today daily open1.2686
 
Trends
Daily SMA201.2743
Daily SMA501.2613
Daily SMA1001.264
Daily SMA2001.2551
 
Levels
Previous Daily High1.2764
Previous Daily Low1.2657
Previous Weekly High1.286
Previous Weekly Low1.2657
Previous Monthly High1.2801
Previous Monthly Low1.2446
Daily Fibonacci 38.2%1.2698
Daily Fibonacci 61.8%1.2723
Daily Pivot Point S11.2641
Daily Pivot Point S21.2596
Daily Pivot Point S31.2535
Daily Pivot Point R11.2747
Daily Pivot Point R21.2809
Daily Pivot Point R31.2854

Author

Haresh Menghani

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

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