As the US Dollar slows its decline, GBP/USD cements its declines over 1.2100.

Market Analytics and Considerations

Key notes

Prior to Tuesday’s London open, GBP/USD is gaining ground above 1.2100. As the US Dollar recovers amidst higher US Treasury yields, cable trims its deficits. The unexpected BoJ policy action has continued to unsettle the investors, which is hurting the higher-yielding GBP.

GBP/USD pokes the short-term critical support line and accepts offers to retest the intraday low. Long-term trading below the 100-SMA gives sellers optimism of reaching the 200-SMA. Before the monthly high, an older horizontal band of 2 weeks inhibits additional upward movement.

Prices for GBP/USD could fall to the 200-SMA region near 1.1980. The psychological magnet at 1.2000 and the swinging low points in late November, which were at 1.1900, could, nonetheless, limit the quote’s gradual decline. If the Sterling pair continues to trend downward after 1.1900, the market may become aware of the swing low of mid-November, which would be located near 1.1760.

In contrast, the influence line close to 1.2130 and the 100-SMA mark near 1.2200 can pose a problem for GBP/USD bulls. After that, investors may be directed towards to the monthly top of 1.2445 before being resisted by the 1.2300 round figure and a fortnight-old horizontal zone near 1.2345.

Consequently, GBP/USD is expected to continue to weaken, but short-term downside may be limited by the 200-SMA and several lows established in November.

Despite the hardline Fedspeak, the recent run-up in the Cable duo may be related to the general US Dollar decline. By doing so, the British Pound also gives some consideration to news reports that predict further economic hardship for the UK as well as political unease over worker wages and the ensuing work stoppages.

Despite these drawbacks, the market has been stabilizing previous advances, therefore if the Q3 UK GDP prints come in below expectations, the GBP/USD values could fall much more. Additionally, as the Fed’s preferred inflation measure, a stronger assessment of Friday’s US Core Personal Consumption Expenditures (PCE) – Price Index, estimated at 4.6% YoY as well as 5.0% from prior readings, may as well support the pair sellers.

                                                            Daily SMA