GBP/USD Price Forecast – Who’s Up for a Buy Trade above $1.3620?
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- GDP rose to 0.9% against the anticipated 0.4%, pushing the British pound higher.
- Core retail sales dropped by 2.3%, instead of the anticipated 0.2%, and this weighed on the US dollar.
- GBP/USD price forecast is bullish above an immediate support level of 1.3650.
The GBP/USD price forecast remains bullish above the $1.3620 level. The day before, GBP/USD closed at $1.3677 after placing a high of $1.3744 and a low of $1.3652. Despite favorable UK economic figures and unfavorable US economic figures, the GBP/USD reversed course after rising for the previous three days. The US Dollar Index, which measures the greenback’s value against a basket of six major currencies, surged higher on Friday after falling for three consecutive sessions. The DXY reached 95.27 on Friday and recovered most of its previous session losses despite the unfavorable economic data release.
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The reason could be the latest comments from New York Fed President John Williams. According to Williams, it was sensible for the central bank to start raising interest rates this year to remove some of the support provided during the pandemic. However, from the UK side, the UK GDP growth rate in November was promising, and manufacturing activities also remained higher, but this failed to give any support to GBP/USD as the strength of the greenback dragged the pair lower for the session.
A quick economic event outlook
At 12:00 GMT, construction output had risen to 3.5%, compared to the forecasted 0.6%, bolstering the British pound. The GDP rose to 0.9% against the anticipated 0.4% and pushed the British pound higher. The Goods Trade Balance dropped to-11.3B against the projected-14.3B and supported Sterling. The Services Index from the quarter also surged to 1.3%, against the anticipated 1.1%, and supported the British pound. The rise in industrial production to 1.0% versus the forecasted 0.2% boosted Sterling. Manufacturing output increased by 1.1%, versus the predicted 0.2% increase, bolstering the British pound.At 19:30 GMT, the CB Leading Index remained flat at 0.2%. At 19:57 GMT, the NIESR GDP estimate increased to 1.2% from 1.1% previously, supporting Sterling. The UK data favoured sterling and limited further GBP/USD currency pair losses.
On the US side, at 18:30 GMT, the core retail sales dropped by 2.3%, against the anticipated 0.2%, and this weighed on the US dollar. Retail sales fell by 1.9%, compared to an expected 0.0% drop, weighing on the greenback. The import prices fell by 0.2%, against the forecasted 0.2%, and this weighed on the dollar. At 19:15 GMT, industrial production dropped by 0.1% against the predicted 0.2% and weighed on the US dollar. The capacity utilization rate also declined to 76.5%, against the expected 77.1%, which weighed on the US dollar.
At 20:00 GMT, the Prelim UoM Consumer Sentiment dropped to 68.8 against the expected 70.0 and weighed the US dollar. Business inventories remained flat at 1.3%. The Prelim UoM Inflation Expectations also remained flat at 4.9%. The US data from Friday was unfavorable, which ultimately limited further losses in GBP/USD on Friday.
Meanwhile, in its latest risk assessment, the UK Health Security Agency said that there was now “high confidence” that Omicron was relatively mild for most adults. It is primarily because of the vaccines that provide high protection against the serious illness caused by the latest coronavirus variant that is spreading faster.
GBP/USD Price Forecast – Daily Technical Levels
Pivot Point: 1.3611
GBP/USD Price Forecast – Upward channel to support at 1.3650
The GBP/USD price forecast is bullish above an immediate support level of 1.3650. However, the pair has shown a slight bearish correction, having dropped from the major resistance level of 1.3748.
At the moment, the GBP/USD pair’s immediate support is at the 1.3650 level. The closing of the daily candle above this support mark is likely to drive a bounce-off in the pair. Besides, the pair has formed an upward channel that we can see in the 3-hour timeframe. This upward channel is extending support at the 1.3550 level, and a spike in demand could lead the pair towards the 1.3745 or 1.3835 level. Furthermore, the 50-day exponential moving average is also supporting an uptrend in the GBP/USD pair.
Conversely, the RSI and Stoch RSI suggest a selling bias in the GBP/USD pair. On the lower side, the breakout of the 1.3650 level can trigger a selling trend until the 1.3604 or 1.3558 level. Further on the lower side, the next support can be found around the 1.3512 level. Lastly, the 50-day exponential moving average stays at 1.3520. Therefore, consider looking for a buy trade above 1.3520 until the 1.3748 or 1.3775 mark. Good luck, and stay tuned for more updates!