- The exchange rate of the British Pound against the US Dollar “GBP/USD” declined further last week, but losses are still relatively contained, and we see the possibility of some slight upward movement in the coming days.
- Currently, the GBP/USD pair is stable around the level of 1.2620 at the time of writing this analysis.
- We are certainly facing an environment of incredibly low volatility in the global forex market, despite the market's focus on the fading expectations of a rate cut by the US Federal Reserve, indicating that the likelihood of significant movement in the coming days remains slim.
Although the short-term technical picture is relatively bearish, we see some good support. The GBP/USD pair is once again trading around the mid-1.25-dollar area and retesting its 200-day moving average. If this key support collapses, we look to the 100-day moving average at the $1.25 support as the next downside target in the "short term.". therefore, the aforementioned support may eventually be broken, as the narrative of repricing the US dollar/Federal Reserve persists due to the remarkably strong US economy, negating the need for a US interest rate cut anytime soon.
Under these circumstances, some Forex analysts believe that the price of the US dollar has more room to rise, and we believe that the limits remain around 1.05 EUR/USD, 0.90 USD against the Swiss franc, and 1.23 GBP/USD, and near... From 152 USD/JPY.
For his part, Sean Osborne, senior forex analyst at Scotiabank, says that the support for the GBP/USD pair at 1.2530 appears stable on the long-term chart now, but it is still incurring a net loss during the week and the spot price is struggling to maintain slight gains. Therefore, a clear move above the resistance 1.2610 would give the pound sterling price more technical support and put it on its way to achieving gains.
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During this week's trading, the downtrend appears well protected by the above-mentioned support levels, and a recovery is likely in the near term, given the light calendar of events in the United States. Moreover, the light economic calendar limits the market's ability to strongly retreat from current expectations regarding the first interest rate cut from the US Federal Reserve in June. Remember, this prediction is what confirmed the rise in the price of the US dollar in 2024.
Economic data appears to be level three in nature, with S&P Global Purchasing Managers' Index (PMI) series and Existing Home Sales scheduled for release next Thursday. Before that, watch for the release of the minutes of the latest US Federal Reserve meeting scheduled for Wednesday, although the information will confirm the data.
Obviously, the US Federal Reserve’s “speech” will be more interesting.
In contrast, the most important feature of the data calendar in Britain is the release of the purchasing managers’ index survey data for February, scheduled for 09:30 GMT, as confirmation of the strengthening of economic activity is expected to extend from the strong numbers for the month of January. Markets expect the manufacturing PMI to recover slightly to a reading of 47.1, the services index to rise to a reading of 54.4, and the composite to decline to a reading of 52.7. Thus, the lesson from the recent past is that the British pound has now proven to be more reactive to negative data surprises, which leads us to expect that any gains following positive data surprises will be limited.
Instead, the biggest moves are likely to be followed by downward errors in the data, suggesting that risks are pointing lower heading into Thursday. An example of this was the massive sell-off in sterling after the retail sales failure in December, which contrasted with the market's almost indifferent reaction to arguably the biggest bullish surprise that came a month later with the release of the January figures. Therefore, while the British pound price is likely to make some gains over the coming days, they may be limited in nature.
GBPUSD Expectations and Analysis Today:
According to the performance on the daily chart above, the price of the GBP/USD pair is still in a bearish correction mode, and the bears’ control over the trend will strengthen if the bears move in the currency pair below the 1.2500 support level. Technically, there will be no shift in the trend to the upside again without returning to the resistance area 1.2775. therefore, we expect calm movements in the currency pair until the announcement of the minutes of the last meeting of the US Federal Reserve and the reading of the British and American manufacturing and services sectors, in addition to the performance of global markets and investor sentiment.
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