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GBP/USD Price Forecast: Drops to $1.23427 Amid BoE Easing Speculation and Fed’s Hawkish Stance
Arslan Butt•Monday, April 22, 2024•2 min read
On Monday, the GBP/USD pair declined to $1.23427, recording a 0.22% drop, as it struggled to rally against a backdrop of both local and international fiscal pressures.
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The pair touched an intraday low of $1.2350, primarily due to rising speculation that the Bank of England (BoE) might introduce more aggressive monetary easing. This possibility has placed downward pressure on the pound, exacerbating the pair’s losses.
Conversely, persistent inflation in the U.S. might compel the Federal Reserve (Fed) to maintain higher interest rates for an extended period, potentially supporting the U.S. dollar and further weighing on the GBP/USD pair.
While diminishing geopolitical tensions have bolstered investor confidence, weakening the safe-haven appeal of the dollar, this factor alone might not be sufficient to significantly counteract the downward trajectory of the GBP/USD.
Key Influences on GBP/USD Dynamics:
- The prospect of continued high-interest rates by the Fed has reinforced the U.S. dollar, as higher Treasury yields attract investors seeking better returns, impacting the GBP/USD exchange rate.
- The easing of tensions in the Middle East, particularly the lack of retaliation from Iran against Israel, has somewhat relieved geopolitical anxieties, softening the dollar’s safe-haven demand and offering some support to the GBP/USD pair.
- Within the UK, increased expectations of the BoE’s policy easing continue to undermine the sterling, with traders anticipating potential rate cuts or quantitative easing measures that could stimulate economic growth but devalue the currency.
These factors collectively shape the current and future landscape of the GBP/USD exchange rate, highlighting the intricate interplay of central bank policies and geopolitical developments.
GBP/USD Price Forecast: Technical Outlook
The GBP/USD pair has slipped to $1.23427, marking a decline of 0.22%. Today’s trading positioned the currency below the pivotal $1.24024 mark, signifying a potential continuation of bearish momentum.
The technical setup points to key resistance levels at $1.24710, $1.25248, and $1.25828, which could cap any upward movements. Conversely, immediate support is observed at $1.23279, with further buffers at $1.22895 and $1.22453 potentially stabilizing further declines.
The 50-Day Exponential Moving Average, standing at $1.24666, suggests an overarching bearish trend. The Relative Strength Index, currently at 31, underscores the potential oversold conditions that could entice buyers, yet the outlook remains bearish unless the pair breaches its current pivot.
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ABOUT THE AUTHOR
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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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