GBP/USD hangs near multi-month low, seems vulnerable around 1.2200 amid bullish USD


  • GBP/USD languishes near a multi-month low and is undermined by a combination of factors.
  • The USD sits near the YTD top amid the Fed's hawkish outlook and elevated US bond yields.
  • The BoE's surprise pause last week continues to weigh on the GBP and contributes to capping.

The GBP/USD pair enters a bearish consolidation phase during the Asian session on Tuesday and oscillates in a range just above its lowest level since March 17 touched the previous day. Spot prices currently trade around the 1.2220 area, though the fundamental backdrop favours bearish traders and supports prospects for an extension of the well-established downtrend witnessed over the past two months or so.

The US Dollar (USD) stands tall near the YTD peak set on Monday and is seen as a key factor that continues to act as a headwind for the GBP/USD pair. The Federal Reserve (Fed) stuck to its hawkish stance at the September policy meeting last week and reiterated the 'higher-for-longer' interest rates narrative. In fact, the US central bank warned that still-sticky inflation was likely to attract at least one more interest rate hike by the end of this year. Furthermore, policymakers see just two rate cuts in 2024 as compared to four projected previously.

Furthermore, the incoming resilient US macro data supports prospects for further policy tightening by the Fed, which remains supportive of the recent blowout rally in the US Treasury bond yields and underpins the Greenback. The yield on the rate-sensitive two-year US government bond touched a 17-year peak and the benchmark 10-year Treasury yield climbed beyond the 4.50% threshold for the first time since 2007. Apart from this, the Bank of England's (BoE) surprise pause last Thursday turns out to be another factor weighing on the GBP/USD pair.

The UK central bank decided to keep the main policy rate unchanged, at a 15-year high level of 5.25%, ending a run of 14 straight hikes since December 2021 in the wake of the recent deceleration of inflation and signs that economic growth is slowing. This, in turn, supports prospects for a further depreciating move for the GBP/USD pair, though the extremely oversold Relative Strength Index (RSI) on the daily chart holds back bearish traders from placing fresh bets. Hence, it will be prudent to wait for some consolidation or a modest bounce before the next leg down.

There isn't any relevant market-moving economic data due for release from the UK on Tuesday, leaving the GBP/USD pair at the mercy of the USD price dynamics. Later during the early North American session, traders will take cues from the US economic docket – featuring the release of the Conference Board's Consumer Confidence Index, New Home Sales data and the Richmond Manufacturing Index – to grab short-term opportunities.

Technical levels to watch

GBP/USD

Overview
Today last price 1.2209
Today Daily Change -0.0003
Today Daily Change % -0.02
Today daily open 1.2212
 
Trends
Daily SMA20 1.2471
Daily SMA50 1.2649
Daily SMA100 1.2639
Daily SMA200 1.2434
 
Levels
Previous Daily High 1.2256
Previous Daily Low 1.2194
Previous Weekly High 1.2425
Previous Weekly Low 1.2231
Previous Monthly High 1.2841
Previous Monthly Low 1.2548
Daily Fibonacci 38.2% 1.2218
Daily Fibonacci 61.8% 1.2232
Daily Pivot Point S1 1.2185
Daily Pivot Point S2 1.2159
Daily Pivot Point S3 1.2123
Daily Pivot Point R1 1.2247
Daily Pivot Point R2 1.2282
Daily Pivot Point R3 1.2309

 

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD strengthens above 1.1600 on risk-on mood

EUR/USD strengthens above 1.1600 on risk-on mood

The EUR/USD pair edges higher to around 1.1615 during the early European session on Wednesday. The improved risk sentiment provides some support to the Euro against the Greenback. Traders will take more cues from the Federal Reserve’s Chair Jerome Powell testifies later on Wednesday.

GBP/USD holds gains above 1.3600 due to improved risk appetite

GBP/USD holds gains above 1.3600 due to improved risk appetite

GBP/USD extends its winning streak for the third successive session, trading around 1.3620 during the Asian hours on Wednesday. The pair is hovering around 1.3648, the highest since February 2022, which was recorded on Tuesday. The risk-sensitive GBP/USD pair receives support from the improved risk appetite amid easing tensions in the Middle East.

Gold price struggles to lure buyers as easing Middle East tensions offsets weaker USD

Gold price struggles to lure buyers as easing Middle East tensions offsets weaker USD

Gold price edges higher as Fed rate cut bets keep the USD bulls on the defensive. Doubts over the durability of the Israel-Iran ceasefire also support the commodity. Traders look forward to this week’s important US macro data for a fresh impetus.

Bitcoin, Ethereum and Ripple eye key breakouts

Bitcoin, Ethereum and Ripple eye key breakouts

Bitcoin price continued to trade in green on Wednesday, having risen 5% over the previous two days. Ethereum and Ripple followed BTC’s footsteps and rallied, approaching their key resistance levels, where a breakout would suggest further upside moves.

Could Iran block the Strait of Hormuz? Why Oil is on edge after US strikes

Could Iran block the Strait of Hormuz? Why Oil is on edge after US strikes

As the Israel-Iran conflict reaches new heights, an old threat is coming back to haunt the markets: that of the closure of the Strait of Hormuz. This narrow arm of the sea in the Persian Gulf, wedged between Iran to the north and the United Arab Emirates and Oman to the south, is much more than a simple sea passage.

The Best brokers to trade EUR/USD

The Best brokers to trade EUR/USD

SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.

Forex MAJORS

Cryptocurrencies

Signatures

Best Brokers of 2025