- GBP/USD extends losses, breaking below the 200-day SMA, with further downside potential.
- Technical indicators suggest continued bearish momentum with support at 1.2665 in focus.
- Recovery above 1.2700 could test the resistance at the recent high of 1.2873.
The British Pound posts losses against the US Dollar in the North American session, despite hawkish rhetoric from the Bank of England’s (BoE) Catherine Mann. Following the latest US inflation report, GBP/USD is trading around 1.2697, down more than 0.37%.
GBP/USD Price Forecast: Technical Outlook
GBP/USD bearish momentum extended after the pair broke 1.2817, the 200-day SMA, opening the door to challenge 1.2800. Momentum remains tilted to the downside, with the pair hitting a daily low of 1.2686, failing to test the intermediate support seen at the August 8 low of 1.2665. If it breaks, the next support would be 1.2600.
On the contrary, buyers should push the exchange rate towards 1.2700. If broken, the next stop would be the November 12 high at 1.2873.
Oscillators like the Relative Strength Index (RSI) hint that sellers are in charge. Therefore, a further decline in GBP/USD is expected.
GBP/USD Price Chart – Daily
The British Pound FAQs
The British Pound (GBP) is the oldest currency in the world (AD 886) and the official currency of the United Kingdom. It is the fourth most traded foreign exchange (FX) unit in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/ USD, which represents 11% of FX, GBP/JPY (3%) and EUR/GBP (2%). The British Pound is issued by the Bank of England (BoE).
The most important factor influencing the value of the Pound Sterling is the monetary policy decided by the Bank of England. The Bank of England bases its decisions on whether it has achieved its main objective of “price stability” – a constant inflation rate of around 2%. Its main tool to achieve this is the adjustment of interest rates. When inflation is too high, the Bank of England will try to control it by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for sterling, as higher interest rates make the UK a more attractive place for global investors to invest their money. When inflation falls too much it is a sign that economic growth is slowing. In this scenario, the Bank of England will consider lowering interest rates to make credit cheaper, so that companies will take on more debt to invest in projects that generate growth.
The data released measures the health of the economy and may affect the value of the pound. Indicators such as GDP, manufacturing and services PMIs and employment can influence the direction of the Pound.
Another important data that is published and affects the British Pound is the trade balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports during a given period. If a country produces highly in-demand export products, its currency will benefit exclusively from the additional demand created by foreign buyers seeking to purchase those goods. Therefore, a positive net trade balance strengthens a currency and vice versa in the case of a negative balance.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
