- The British Pound's resilience against the strong US Dollar has not lasted long.
- Over the past six trading sessions, the GBP/USD has been subjected to selling, starting from the resistance level of 1.3008.
- Reaching the support level of 1.2596, the lowest level for the currency pair in six months, and closing the week's trading stable around the level of 1.2617.
- Technically, we mentioned that the movement of the pound sterling/dollar price below the psychological level of 1.3000 would give the bears momentum and thus prepare for stronger downward breaches, which is what actually happened.
The British Economy: Least Affected by Trump
With Trump's victory, talk has increased about renewed trade wars and tariffs between global economies led by the United States. However, economic experts have stated that Trump's policies may have a limited impact due to strong British service exports and the level of the goods trade deficit with the United States. Services are usually exempt from trade wars. Conversely, experts believe that the strength of the US economy under Trump will boost Britain if it increases the value of service exports.
Top Forex Brokers
Future of the Cautious Bank of England Policy
Moreover, Expectations have increased that the Bank of England’s policies will remain cautious after the recent announcement that inflation rates in the country rose above the bank’s target. According to the results of the economic calendar data, the British consumer price index may rise this week by an annual rate of 2.2%, according to the average forecast of 24 Bloomberg surveys. This is up from 1.7% last month, when it fell below the Bank of England’s 2% target for the first time in more than three years. At its last meeting, the Bank of England delivered a second interest rate cut by a quarter of a percentage point and sent no indication that rapid easing might be necessary. This came as the stance is more conservative than that of the neighbouring euro zone, and is in line with the calm tone adopted by US Federal Reserve Chairman Jerome Powell recently.
Technical forecasts and signals for the GBP/USD pair today:
Technically, the downward trend of the GBP/USD is gaining strength. The continued strength of the US dollar may give the bears the opportunity to move to stronger support levels, the closest of which is currently 1.2520, then 1.2440, and then 1.2300, which is important for moving technical indicators towards oversold levels. You can consider buying GBP/USD from both the second and last levels without taking risks and activating take-profit and stop-loss orders to ensure the preservation of the trading account. According to recent trades, the pound sterling is recording its worst extended losing streak in 10 years, falling by 2% last week alone, marking the seventh consecutive week of losses.
You can get more GBP/USD signals and free live trading recommendations exclusively on our website.
As for the performance of technical indicators, the Relative Strength Index (RSI) is on the verge of the 30 level, which confirms its proximity to oversold levels. Therefore, currency traders will be watching for new buying opportunities. As for the MACD indicator, it is also heading towards oversold levels. Ultimately, the Stochastic indicator is settling well below the 20 level and is waiting for a rebound upwards.
Ready to trade our daily GBP/USD Forex forecast? Here’s some of the best forex broker UK reviews to check out