GBP/USD Forecast: Struggling to Retain Above 1.33 amid Brexit, BoE

• The GBP/USD pair gained some positive momentum on Thursday, but the trend failed to continue.
• The uncertainty surrounding Brexit weighed on the British pound and limited its gains.
• Fundamentals favor USD bulls and point to a decline in the near term.

The GBP/USD forecast remains mixed as the recent upside is capped by key levels while the reduced rate hike bets and Brexit worries weigh on the pound. The GBP/USD pair was trading a few pips below its Asian session high, up only 0.10% on the day.

The pair gained momentum at the start of the trading day on Thursday but has since lost three consecutive days. The gains in Asian stocks have undermined the US dollar’s status as a safe haven while providing some support to the pound, although a significant rebound seems elusive.

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After Brexit, the clash between France and Great Britain over fishing rights and the stalemate over the Northern Ireland protocol could continue to weigh on the pound sterling. Furthermore, the outlook for more aggressive Fed tightening favors the dollar bulls and helps contain the growth of the pound and dollar.

In fact, money markets have begun speculating on the possibility of a 50 basis point rate hike by the end of 2022 in response to the restrictive comments made by Fed chief Jerome Powell. Powell reiterated to Congress on Wednesday afternoon that the Federal Reserve is likely to accelerate the decline in asset purchases.

Meanwhile, any optimism about the market should be dampened by concerns about the economic impact of discovering a new and possibly vaccine-resistant variant of the Coronavirus. In addition, US officials reported finding a more contagious strain of Omicron in the country, escalating market concerns.

Despite the lack of strong follow-up selling, the fundamentals support the prospect of continuing the recent downtrend. Furthermore, it is unlikely that the UK will release any major economic data on Thursday, leaving the GBP/USD pair at the mercy of the US dollar’s rate movements.

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Traders will pay close attention to the weekly US unemployment report and speeches from leading members of the Federal Reserve at the start of the North American session. Combining these factors will spur demand for the US dollar and give the GBP/USD pair some short-term momentum.

GBP/USD price technical forecast: Capped by 1.3300

The GBP/USD price remains positive but still below the key level of 1.3300 and the 20-period SMA on the 4-hour chart. The pair has an average daily range of 44% so far, which is higher than normal. It indicates that the pair may see a higher volatility on the day. Finding acceptance above 1.3300 may trigger some strong buying.