GBP/USD Price Forecast: Descending Triangle to Underpin at $1.3213
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- Bank of England’s (BOE) Deputy Governor Ben Broadbent’s hawkish remarks further boosted the GBP/USD prices.
- Lack of actual data/events could limit market swings, at least until Friday’s release of the US Consumer Price Index (CPI).
- GBP/USD must remain below 1.3260 to have a chance of developing downward momentum in the near term.
The GBP/USD coin extended its early-day bullish bias and stayed well bid around the 1.3290 level. The GBP/USD price forecast remains neutral as the pair trades choppily between a narrow range of 1.3285 to 1.3215. The previous optimism surrounding Brexit and the Bank of England’s (BOE) next move keep the buyers hopeful and contributes to the currency pair gains. Moreover, the reducing fears of the South African covid variation, named Omicron, and prospects of finding a cure for the virus strain were also positives for the currency pair.
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Weaker greenback underpin GBP/USD
The broad-based US dollar weakness, triggered by the risk-on market sentiment, also played a significant role in supporting the GBP/USD currency pair. Aside from that, Deputy Governor Ben Broadbent of the Bank of England (BOE) made hawkish comments, which further boosted GBP/USD pair prices. The GBP/USD currency is currently trading at 1.3285 and consolidating in the range between 1.3254 – 1.3290.
Omicron boosted the market sentiment
The market trading sentiment has been flashing positive signs since the start of the new week. The hopes of finding a cure for the South African covid strain known as Omicron boosted the market sentiment. During the first half of the UK session, US equities continued to rebound, with the recovery becoming more broad-based, with tech and growth stocks joining the rally.
According to reports, Omicron patients only had minor symptoms. This lightened concerns about the new coronavirus’s economic consequences and restored investor confidence, as seen by a positive tone in the equities markets. That said, the S&P 500 index is already up roughly 1% and is aiming for a test of the 4600 level. The Dow Jones Industrial Average continues to lead, with gains approaching 2.0 percent. Meanwhile, the Nasdaq 100 is up roughly 1.0 percent, reversing more than 1.8 percent from recent session lows. Thus, the prevalent upbeat market mood undermined the British Pound, which, in turn, was seen as a key factor that provided a modest lift to the GBP/USD pair.
Brexit and the Bank of England’s (BoE)
The currency pair buyers took further positive clues from optimism surrounding Brexit and the Bank of England’s (BOE) next move. In the meantime, the reducing fears of the South African covid variation, named Omicron, and prospects of finding a cure for the virus strain were also positives for the pair. According to the UK Telegraph, British diplomats are willing to grant more fishing licenses to French fishermen to calm the Brexit-related Channel turmoil. “Ireland is to get €920 million from an EU fund set up to alleviate the consequences of Brexit,” according to the UK Express.
In other news, the Bank of England’s (BOE) Deputy Governor Ben Broadbent’s hawkish remarks further boosted the GBP/USD prices. As per the keywords, “Inflation is likely to soar “comfortably” above 5% next spring when the energy regulator Ofgem raises a price cap affecting millions of households,” said BOE’s Broadbent.
At the USD front, the bearish US dollar price action was considered one of the primary factors that helped GBP/USD prices stay bid. The broad-based US dollar tried to maintain its early-day gains but lost some traction, as the market’s upbeat mood tends to ease the safe-haven dollar demand. Although the losses in the dollar could be short-lived as there is still much uncertainty over Omicron’s health and economic impact,
Looking forward, the lack of actual data/events could limit market swings, at least until Friday’s release of the US Consumer Price Index (CPI). Following that, the Federal Reserve’s meeting next week will also be essential to follow. Retail sales and housing data from the UK’s second tier may attract investors’ interest in the home. Meanwhile, stories about Brexit and Omicron will be crucial.
GBP/USD price forecast: Daily support and resistance
S3 1.313
S2 1.3194
S1 1.3229
Pivot Point 1.3258
R1 1.3293
R2 1.3321
R3 1.3385
GBP/USD price forecast: Descending Triangle pattern to extend hurdle at 1.3260
On Wednesday, the GBP/USD is attempting to break over the resistance level of 1.3260. If the GBP/USD manages to reclaim this level, it will move on to the next resistance level at 1.3285. A break over 1.3285 will pave the door for a test of the next resistance level at 1.3360. If GBP/USD rises above 1.3360 again, the next resistance level will be approached at 1.3375.
GBP/USD must remain below 1.3260 to have a chance of developing downward momentum in the near term. The next level of support for GBP/USD is at the recent lows at 1.3210. A breakout below the support level at 1.3212 will open the door for the further selling trend until at 1.3150.
The RSI is entering bearish territory (below 50), signaling chances of a selling trend continuation in the GBP/USD. At the same time, the 50 periods exponential moving average is also extending resistance at 1.3260 level, and above this, 1.3287 is an immediate barrier. However, a slice through the 1.3287 can drive bulls in the market.
Typically, a descending triangle pattern has a high tendency to exhibit a bearish breakout. Therefore, a break below the 1.3112 level can help us capture a sell trade until the next support level of 1.3151 or 1.3125. Alternatively, the quick buy trade can be placed over 1.3212 to target 1.3260 and 1.3285. Good luck, and stay tuned for more updates!
