GBPUSD set up for further decline

The GBP/USD pair today is influenced by mixed technical and fundamental signals.

Fundamentally, recent data suggests a softening in the UK's economic outlook, with low growth and high inflation leading the Bank of England (BoE) to keep interest rates steady. Market analysts expect this pause to persist, limiting upward pressure on GBP. Meanwhile, the U.S. dollar remains supported by stronger economic metrics, including persistent inflation and better-than-expected job numbers, which may prompt the Federal Reserve to remain hawkish longer. This economic divergence is putting downward pressure on GBP/USD in the short term.

Technically, GBP/USD recently saw bullish momentum but has shown signs of a potential correction. The pair has support around the 1.2800 level, while resistance is in the 1.3150 range. Indicators such as the Moving Average Convergence Divergence (MACD) show upward momentum but with a slowdown, suggesting consolidation may be ahead. The Relative Strength Index (RSI) is near overbought territory, which aligns with a potential short-term pullback. Analysts suggest watching for a sustained breakout above 1.3100 as a bullish signal, but failure to hold above this level may lead to a retest of lower support levels around 1.2800 or below.

Overall, while the long-term outlook for GBP/USD may lean bearish given UK economic challenges, short-term technical indicators suggest a cautious, range-bound approach.

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