GBP/USD reached a new year-to-date low at 1.3342 though bounced off towards 1.3370s

During the New York session, the British pound grinds lower, barely down 0.05%, trading at 1.3384 at press time. The market sentiment is downbeat, with US equity indices down. Further, the CBOE Volatility Index (VIX) is rising almost 7%, spurring a sell-off in the market as investors scramble toward safe-haven assets, with the US dollar benefitting from it. Also, risk-sensitive currencies like the GBP, the AUD, and the NZD, extend their losses throughout the week.

In the overnight session, the GBP/USD traded within a narrow range around the 1.3380s-1.3400 area. However, in the European session, the British pound failed to gain traction at  1.3448, retreating towards the figure, surpassing it on its way towards the R2 pivot point at 1.3344. Nevertheless, the downward move was faded, as Sterling recovered, at press time is trading below Monday’s low at 1.3384.

Also, in the European session, UK’s IHS Markit PMI figures for November were unveiled. The Manufacturing PMI rose to 58.2, higher than the 57.8. Additionally, the gauge for UK services came slightly better-than-expected, aimed lower to 59.6, from 59.1 in October.

BoE’s Haskel and Bailey talk about rates and forward guidance

During the New York session, some Bank of England (BoE) members have crossed the wires. Jonathan Haskel, a BoE Monetary Policy member, said that the path of interest rates is upwards. He noted that a rise in rates above the emergency level should be viewed as a symptom of economic recovery. Meanwhile, according to Reuters, Andrew Bailey, BoE Governor, said that the bank may not return to offering a hard form of guidance. However, he reiterated that it is not off the table that the central bank would not advise on rates. Bailey added that decisions are made meeting by meeting.

On the macroeconomic front, the US economic docket unveiled the IHS Markit PMI’s for November. The Manufacturing PMI rose to 59.1, higher than the 59 expected. The Services Index rose but lower than the 59.1 foreseen, to 57. Moreover, the Richmond Fed Manufacturing Index for November increased to 11, better than the five expected.

GBP/USD Price Forecast: Technical outlook

The daily chart shows that the British pound has a downward bias, depicted by the daily moving averages (DMA’s) residing above the spot price. Also, successive series of lower highs and lower lows confirm the bearish trend.

The first support level on the way down would be the November 12 low at 1.3352. A breach of the latter would expose the figure at 1.3300, which was unsuccessfully broken during the last two months of 2020.

On the flip side, the first resistance would be 1.3400. A break of that level would expose crucial supply areas, like the downslope trendline, around 13450, followed by a test of the 1.3500 figure.