GBP/USD Price Forecast: GBP Steady at $1.3420 amid Bearish News
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- JOLTS job openings increased to 10.44M, against the predicted 10.02M.
- UK wanted to de-escalate Brexit-related tensions with the EU and it did not want to trigger Article 16.
- GBP/USD price forecast remains bearish below a strong resistance level of 1.3444 level.
The GBP/USD pair saw some bearish bias during the early European session, but there was no follow-through. The GBP/USD price forecast remains bearish, although it has managed to stay above the 1.3400 barrier so far.
The day before, GBP/USD was closed at $1.3413 after hitting a high of $1.3427 and a low of $1.3353. GBP/USD reversed course on Friday and rose for the day after breaking its 3-day bearish streak amid a decline in the US dollar.
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Weakness in the US dollar weighed down on GBP/USD
The pair built on Friday’s recovery move from the 1.3350 region, or YTD low, and gained some traction in the early trading hours on the opening day of the new week. The rise was fueled by a further pullback in the US dollar from 16-month highs, spurred by data showing that US consumer morale fell to a 10-year low in November.
The greenback was further weighed down by a new drop-in US Treasury bond yields, while various factors helped prevent further losses. Traders seem to believe that the US Federal Reserve will use more aggressive policy measures to combat persistently high inflation. The safe-haven USD benefited from this, as well as the cautious mood.
The US Dollar Index, which measures the greenback’s value against a basket of six major currencies, fell on Friday but remained at the 95.0 level. The greenback lost some ground on Friday after reaching a high of 95.26.
Strong US inflation print fails to underpin dollar
Although the greenback saw declines ahead of the weekend, the US currency remained positive for the week with the biggest weekly gains in almost three months after a surprisingly strong US inflation print, which prompted investors to advance their bets for a US rate hike.
A quick economic event review
- On the data front, there was no data released from Great Britain on Friday. However, from the US side, at 20:00 GMT, the JOLTS job openings increased to 10.44M, against the predicted 10.02M. It supported the US dollar and capped further gains in GBP/USD.
- The Prelim UoM Consumer Sentiment dropped to 66.8 from an estimated 72.5, which added pressure on the US dollar and pushed GBP/USD prices higher in the market.
- The Prelim UoM Inflation Expectations increased to 4.9% in November from the previous 4.8%.
The US dollar turned red after the University of Michigan survey showed a plunge in US consumer sentiment. It’s the lowest level in a decade as surging inflation cut into households’ living standards, with few believing that policymakers were doing enough to mitigate the issue.
Brexit concerns ease the market, supporting GBP
The British pound was also getting stronger against the US dollar after Brexit concerns eased in the market. The UK wanted to de-escalate Brexit-related tensions with the EU. It did not want to trigger Article 16, which would allow the UK to unilaterally suspend parts of the Northern Ireland protocol that govern the movement of goods in and out of NI.
As Brexit ministers from both sides have started talks to form the basis of an agreement, as the UK was still not fully on board with the bloc’s most recent proposal to reduce checks on goods crossing between Britain and Northern Ireland. The easing of concerns over Brexit jitters added strength to the GBP, ultimately pushing the GBP/USD higher.
GBP/USD price forecast- Daily technical levels
Support Resistance
1.34111.3423
1.3405 1.3429
1.3399 1.3435
Pivot Point: 1.3417
GBP/USD price forecast: Downward trendline extend resistance at $1.3444
The GBP/USD price forecast remains bearish below a strong resistance level of 1.3444 level. Closing of candles below the 1.3447 level is adding selling pressure on the pair.
On the bearish side, the GBP/USD’s immediate support is at the 1.3354 level. A bearish breakout of this level could drive further selling trends until the next support levels of 1.3279 and 1.3247 are reached.
On the bullish side, the resistance holds at around 1.3444, marking a 38.52% Fibonacci retracement level. A bullish breakout of 38.2% Fibo level can drive further buying trend until 50% and 61.8% Fibonacci retracement level of 1.3480 and 1.3515 level.
The leading and lagging indicators are in support of a selling bias. The 20 and 50 days EMAs are holding at the 1.3450 level, and the closing of candles below these lines demonstrates a selling sentiment among traders.
Likewise, the RSI and MACD are holding below 50 and 0, respectively. Thus, capturing a sell position below the 1.3444 level is likely to be a good idea.
