|

GBP/USD Price Forecast: Dives to its lowest level since November 2023 amid relentless USD buying

  • GBP/USD continues losing ground for the fifth straight day and drops to over a one-year low.
  • Stagflation fears and UK fiscal concerns continue to weigh on the GBP amid a bullish US Dollar.
  • A slightly oversold RSI on the daily chart warrants some caution for aggressive bearish traders. 

The GBP/USD pair remains under heavy selling pressure for the fifth straight day and dives to its lowest level since November 2023, around the 1.2125 region during the Asian session on Monday. Moreover, the fundamental backdrop seems tilted in favor of bearish traders, though slightly oversold conditions on the daily chart warrant some caution before positioning for further losses.

Investors remain concerned about the risk of stagflation in the UK. This, along with the anxiety about the UK's fiscal health, turn out to be key factors contributing to the British Pound's (GBP) relative underperformance. Apart from this, the underlying strong bullish sentiment surrounding the US Dollar (USD), bolstered by firming expectations that the Federal Reserve (Fed) will pause its rate-cutting cycle, validates the negative outlook for the GBP/USD pair. 

From a technical perspective, the Relative Strength Index (RSI) on the daily chart has dropped below the 30 mark, making it prudent to wait for some near-term consolidation or a modest rebound before the next leg down. Any attempted recovery, however, might confront resistance and remain capped near the 1.2200 mark. That said, some follow-through buying beyond the Asian session top, around the 1.2210 area, could trigger a short-covering move. 

The GBP/USD pair might then accelerate the positive move towards the 1.2245-1.2250 intermediate hurdle before aiming to reclaim the 1.2300 round figure. The latter should act as a key pivotal point, which if cleared decisively could negate the negative bias and shift the near-term bias in favor of bullish traders. 

Meanwhile, the downward trajectory seems strong enough to drag the GBP/USD pair further towards testing sub-1.2100 levels, or the November 2023 low. Acceptance below the said handle could make spot prices vulnerable to decline further towards October 2023 through, around the 1.2035 region, en route to the 1.2000 psychological mark.

GBP/USD daily chart

fxsoriginal

US Dollar PRICE Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the British Pound.

 USDEURGBPJPYCADAUDNZDCHF
USD 0.29%0.56%-0.24%0.12%0.20%0.18%0.06%
EUR-0.29% 0.25%-0.47%-0.11%0.06%-0.05%-0.14%
GBP-0.56%-0.25% -0.73%-0.35%-0.21%-0.30%-0.39%
JPY0.24%0.47%0.73% 0.35%0.36%0.28%0.31%
CAD-0.12%0.11%0.35%-0.35% 0.04%0.06%0.03%
AUD-0.20%-0.06%0.21%-0.36%-0.04% -0.13%-0.18%
NZD-0.18%0.05%0.30%-0.28%-0.06%0.13% -0.09%
CHF-0.06%0.14%0.39%-0.31%-0.03%0.18%0.09% 

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Author

Haresh Menghani

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

More from Haresh Menghani
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD drops to daily lows near 1.1630

EUR/USD now loses some traction and slips back to the area of daily lows around 1.1630 on the back of a mild bounce in the US Dollar. Fresh US data, including the September PCE inflation numbers and the latest read on December consumer sentiment, didn’t really move the needle, so the pair is still on course to finish the week with a respectable gain.

GBP/USD trims gains, recedes toward 1.3320

GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.

Gold makes a U-turn, back to $4,200

Gold is now losing the grip and receding to the key $4,200 region per troy ounce following some signs of life in the Greenback and a marked bounce in US Treasury yields across the board. The positive outlook for the precious metal, however, remains underpinned by steady bets for extra easing by the Fed.

Crypto Today: Bitcoin, Ethereum, XRP pare gains despite increasing hopes of upcoming Fed rate cut

Bitcoin is steadying above $91,000 at the time of writing on Friday. Ethereum remains above $3,100, reflecting positive sentiment ahead of the Federal Reserve's (Fed) monetary policy meeting on December 10.

Week ahead – Rate cut or market shock? The Fed decides

Fed rate cut widely expected; dot plot and overall meeting rhetoric also matter. Risk appetite is supported by Fed rate cut expectations; cryptos show signs of life. RBA, BoC and SNB also meet; chances of surprises are relatively low.

Ripple faces persistent bear risks, shrugging off ETF inflows

Ripple is extending its decline for the second consecutive day, trading at $2.06 at the time of writing on Friday. Sentiment surrounding the cross-border remittance token continues to lag despite steady inflows into XRP spot ETFs.