- GBP/USD attracts fresh sellers on Friday, though the downside remains cushioned.
- Traders now seem reluctant to place aggressive directional bets ahead of the US PCE.
- The technical setup suggests that the path of least resistance remains to the downside.
The GBP/USD pair extends the overnight late pullback from the 1.2670 region and trades with a mild negative bias during the Asian session on Friday. Spot prices currently hover around the 1.2635-1.2630 area and remain well within the striking distance of the lowest level since mid-May touched on Thursday.
The British Pound (GBP) continues to be undermined by rising bets for a rate cut by the Bank of England (BoE) in August. Apart from this, some repositioning trade ahead of the crucial US inflation data lifts the US Dollar (USD) to a fresh two-month high, which, in turn, is seen as another factor exerting some downward pressure on the GBP/USD pair. That said, the uncertainty about the Federal Reserve's (Fed) rate-cut path keeps a lid on any further gains for the buck and helps limit the downside for the currency pair.
From a technical perspective, the emergence of fresh selling and acceptance below the 1.2650-1.2645 confluence – comprising 50-day and 100-day Simple Moving Averages (SMAs) – favors bearish traders. Moreover, oscillators on the daily chart have been gaining negative traction and suggest that the path of least resistance for the GBP/USD pair is to the downside. That said, any subsequent slide is likely to find some support near the weekly low, around the 1.2615-1.2610 area, ahead of the 1.2600 mark, which if broken will set the stage for deeper losses.
The GBP/USD pair might then accelerate the downfall towards challenging the very important 200-day SMA, currently pegged near the 1.2560 region en route to the 1.2500 psychological mark. The downward trajectory could extend further towards testing the May monthly swing low, around the 1.2445 area.
On the flip side, the 1.2670 area, or the overnight peak, now seems to act as an immediate hurdle ahead of the 1.2700 round-figure mark. A sustained strength beyond the latter will suggest that the recent corrective decline has run its course and lift the GBP/USD pair beyond the 1.2720-1.2725 supply zone, towards the 1.2800 mark. Bullish traders might then aim back towards challenging the multi-month top, around the 1.2860 region touched on June 12, and lift spot prices further towards the 1.2900 round-figure mark.
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
Editors’ Picks
EUR/USD holds steady above 1.1100, Fed rate decision in focus
EUR/USD fluctuates in a tight range above 1.1100 on Wednesday. A broadly weak US Dollar, amid increased bets of an outsized Fed rate cut and a cautiously optimistic market mood, underpins the pair. All eyes remain on the Fed policy verdict.
GBP/USD consolidates CPI-inspired gains near 1.3200
GBP/USD stays in a consolidation phase near 1.3200 after climbing above this level with the first reaction to the UK inflation data for August. Later in the day, the Federal Reserve will announce policy decisions and publish the revised dot-plot.
Gold stays below $2,580 ahead of Fed ruling
Gold holds its ground following Tuesday's pullback but struggles to gather bullish momentum, trading in a narrow channel below $2,580. Investors stay on the sidelines while gearing up for the Federal Reserve's interest rate decision.
Federal Reserve set for first interest-rate reduction in four years amid growing bets of jumbo cut
The Federal Reserve is widely expected to lower the policy rate after the September meeting. The revised Summary of Economic Projections and Fed Chairman Powell’s remarks could provide important clues about the rate outlook.
UK CPI set to grow at stable 2.2% in August ahead of BoE meeting
The United Kingdom Office for National Statistics will release August Consumer Price Index figures on Wednesday. Inflation, as measured by the CPI, is one of the main factors on which the Bank of England bases its monetary policy decision, meaning the data is considered a major mover of the Pound Sterling.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.