- The British pound rises in the American session, up 0.54%.
- GBP/USD’s gains were attributed to falling US Treasury yields, which undermined the dollar.
- Scotiabank and BBBH expect further declines for the GBP/USD pair.
- GBP/USD Price Forecast: Pair remains biased to the downside unless GBP bulls push price above 1.3160.
GBP rebounds from weekly lows near 1.3000 amid a weaker US dollar, buoyed by falling US Treasury yields and upbeat market sentiment around financial markets. At 1.3067, the pair GBP/USD represents the above, ready for a retest of 1.3100.
US stocks continue to trade higher, except for the tech-heavy Nasdaq, which is down 0.79%, attributed to a worse-than-expected earnings report from Netflix. In the currency complex, risk-sensitive currencies remain in the driver’s seat, led by high-beta currencies and the British pound, unlike the dollar, which is losing 0.63%, as shown by the US dollar index. , at 100,352, below the annual maximum at 101,035.
Scotiabank and Brown Brothers Harriman (BBH) expect the pound to fall further
GBP/USD, meanwhile, took advantage of a weaker dollar, pushing towards 18 Apr daily highs of 1.3064, in which case the pair would resume its upward trajectory towards 1.3100 in what appears to be a corrective rally. Scotiabank analysts wrote in a note that they expect GBP/USD to fall in the coming months as the Bank of England fails to meet rate hike expectations.
They further added that “the IMF noted in its outlook revision yesterday that the UK will see the highest rate of inflation this year among the G7 countries, and revised its GDP growth projections for the UK by about 1 percentage point. in each of 2022 and 2023 in the midst of the cost of living crisis.”
Consistent with Scotiabank analysts, Brown Brothers Harriman (BBH) analysts wrote in a note that “sterling is rebounding after support around 1.30 held. Here too, we remain negative and look for an eventual test of last week’s new cycle low at 1.2975. A break below would set up a test of the Nov 2020 low near 1.2855 and then possibly the Sept 2020 low near 1.2675.”
GBP/USD Price Forecast: Technical Outlook
GBP/USD is still in a downtrend. If GBP/USD is about to turn neutral, it would need to recapture the December 31st cycle high at 1.3160. Unless GBP bulls push prices through the latter, Wednesday’s rally would be seen as an opportunity for GBP/USD bears to open new bets at a better level.
That said, the first support for GBP/USD would be the 1.3000 figure. A break of the latter would expose the April 19 daily low at 1.2980. Once cleared, it would open the door for further testing to the downside. First, the yearly low at 1.2971, followed by the November 2020 low near 1.2855.
Additional technical levels
Source: Fx Street
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