- The GBP/USD price remains on the back foot.
- BoE and Fed may approach pivot after one hike.
- Moving forward, the US Q4 GDP data is key for the pair.
Bears are looking for more clues to determine whether London will open further on Wednesday as the GBP/USD forecast remains below 1.2320. Following a two-day downtrend, the cable pair remains on the sidelines, mirroring the broader market’s inactivity.
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Recent price action appears to be capped by the lack of liquidity in the markets and the decline in hawkish expectations from both the Bank of England and the Federal Reserve.
Reuters poll shows the Bank of England is just one rate hike away from hitting its pivot point after two increases of 0.25%. According to Fed fund futures, the Fed is forecast to raise rates twice as much this year to around 5% before beginning to cut rates later this year.
Federal Reserve officials insist that the 75 basis point hike is still on the table. Cable pair traders were also left uninformed by weak January US and UK activity data.
A deficit in the UK has been recorded due to various stimulus measures and electricity payments. Still, these have not resolved the UK workers’ problems, suggesting a more negative move for GBP/USD. As well as ongoing disagreements between the UK and Europe over Brexit, sellers are also attracted to the pair.
Meanwhile, US recession concerns are looming, which has pushed the US dollar up ahead of the Q4 GDP and the Federal Open Market Committee (FOMC) meeting next week.
In the midst of these games, US Treasury yields have remained unchanged following Tuesday’s pullback, while S&P 500 futures have fallen slightly, but Asia-Pacific stocks have traded mixed, supporting zone currencies.
GBP/USD key events ahead
Looking ahead, January’s UK Producer Price Index (PPI) data may keep pound traders busy ahead of Thursday’s key US fourth-quarter GDP data and the Fed meeting next week.
GBP/USD price technical forecast: Bears gaining strength
The 4-hour chart of the GBP/USD shows a clear bearish bias. The pair has slipped below the 30-period SMA and is pointing at further losses. The RSI value has dropped below the 50.00 level as well. The key support for the pair emerges at 1.2300, ahead of yesterday’s low of 1.2265.
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On the flip side, the resistance appears at 1.2340 ahead of 1.2400 and then 1.2450. However, the probability of bearish breakdown is high in given conditions.
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