GBP/USD Price Forecast: Why 1.3280 is Crucial for Bulls?

• GfK Consumer Sentiment dropped further to-26 against the projected-19 and weighed on the British Pound.
• British Pound remained resilient to the Russia-Ukraine crisis that dominated all week.
• GBP/USD is gaining support at 1.3350 which is extended by a 23.6% Fibonacci retracement level.

The GBP/USD is trading with a slight bullish bias at 1.3375, having closed at $1.3414 after hitting a high of $1.3441 and a low of $1.3365. The GBP/USD broke its 3-day bearish streak on Friday. It turned green for the session amid the declining price of the US dollar and the prevailing risk sentiment in the market.

The currency pair dropped to its more than 2-month lowest level during the previous session but recovered a small portion of that loss on Friday. It’s mainly due to a price correction. In the first three weeks of February, the Bank of England’s hawkish tone kept supporting the British Pound. However, the bears came over and took hold due to the prevailing uncertainty in the market after Russia invaded Ukraine.

On Thursday, the currency pair GBP/USD dropped to its lowest level since December 22nd as the tensions surrounding Russia and Ukraine escalated and uncertainty prevailed in the market. However, on Friday, the market returned to normal as inflation worries took over the concerns of war, which turned the market mood to risk-on sentiment. The British pound is considered a highly sensitive currency and it gained a lot of traction, which pushed GBP/USD higher on Friday.

GBP/USD Fundamentals Analysis

From the British side, at 05:01 GMT, the GfK Consumer Sentiment dropped further to-26 against the projected-19 and weighed on the British Pound. It capitulated further gains in GBP/USD. From the US side, at 18:30 GMT, the Core PCE Price Index remained flat with projections of 0.5%. The increase in Core Durable Goods Orders to 0.7%, versus the expected 0.4%, boosted the US dollar. Durable Goods Orders also increased to 1.6%, versus the expected 1.1%, bolstering the dollar. Personal income increased by 0.0%, against an estimated loss of 0.3%, supported by the dollar.

Personal spending also surpassed the anticipated 1.6% and came in at 2.1%, which supported the US dollar. At 20:00 GMT, the Revised UoM Consumer Sentiment rose to 62.8, against an estimated 61.7, and pushed the dollar higher. The pending home sales fell 5.7% against the projected 1.5% and weighed on the dollar. The Revised UoM Inflation Expectations in February came in at 4.9%. Most of the data from the USA came in favor of the dollar, which kept the gains in GBP/USD limited for the day.

Meanwhile, the US Dollar Index, which measures the greenback’s value against a basket of six major currencies, was still under pressure despite the favorable economic data release. As a result, the DXY dropped to 96.54 levels and remained on the back foot, which ultimately added further to the rising prices of GBP/USD on Friday.

Daily Technical Levels

Support Resistance

1.3247 1.3527

1.3119 1.3679

1.2967 1.3807

Pivot Point: 1.3399

GBP/USD Price Forecast – Technical Outlook

The GBP/USD is trading at the 1.3375 level, gaining support at 1.3350 which is extended by 23.6% Fibonacci retracement level. The GBP/USD pair recovered a significant portion of its intraday losses. It was last seen trading at the 1.3375 zones during the early European session, down about 0.20 percent for the day.

The GBP/USD appears to have found temporary support at 1.3340. If that level becomes resistant, the pair might fall to 1.3300 (psychological level). Whereas, 1.3280 (static level, multi-month low) in the aftermath.

On the other hand, 1.3400 (psychological level) corresponds to the initial barrier before 1.3430. (static level, 20-period SMA on the four-hour chart). A daily close above the latter is expected to entice buyers and open the door for a sustained comeback toward 1.3500.

Good luck, and stay tuned for more updates!