GBP/USD Daily Forecast: Bearish Outlook Below $1.3142 Amid Weak Market Sentiment

The GBP/USD pair is trading at $1.31052, showing a slight 0.01% increase as of today, but the broader market sentiment remains bearish.

A combination of weak economic data and growing uncertainty over the UK’s economic outlook has pressured the pair, particularly as investors turn their focus to key events like the Halifax HPI and US Non-Farm Employment Change data.

Last week, the Halifax House Price Index (HPI) came in at 0.3%, slightly exceeding forecasts of 0.2%, but falling short of the previous 0.9%. This weak data, coupled with stagnant wage growth in the UK, has only fueled market skepticism.

Meanwhile, in the US, non-farm payrolls came in below expectations at 142,000 (versus 164,000 forecast), leading to slight upward movement in the dollar and adding to the pressure on GBP/USD. Furthermore, the US unemployment rate held steady at 4.2%, which, along with average hourly earnings rising by 0.4%, has provided further support for the dollar’s strength.

BREAKING NEWS 🚨🚨🚨

Update Mata Uang: GBP/USD & GBP/JPY Jelang Rilis Kebijakan ECB! pic.twitter.com/8RkyEZyibZ

— PT Phillip Futures (@phillipfutures) September 9, 2024

Technical Outlook: Bearish Momentum Strengthens Below Pivot Point

On the technical front, GBP/USD remains capped below the key pivot point of $1.3142, with mounting resistance levels at $1.3188, $1.3227, and $1.3266. Despite attempts to recover, the pair continues to face downward pressure. The 50-day Exponential Moving Average (EMA) at $1.3154 reinforces this bearish sentiment, with the pair consistently struggling to break above this level.

The Relative Strength Index (RSI) is currently at 39, signaling oversold conditions, which could indicate a further continuation of the downtrend. If the pair fails to break above immediate resistance levels, a retest of key support levels becomes increasingly likely. Immediate support for GBP/USD lies at $1.3089, with subsequent levels at $1.3052 and $1.3011 providing a cushion against further declines.

If the pair breaches the $1.3089 support, a rapid move toward $1.3052 is expected. A break below this level could extend the pair’s losses to $1.3011, particularly if bearish momentum picks up in response to unfavorable economic data or weakening sentiment surrounding the British economy.

$GBPUSD it extend higher in ((i)) as expected shown from 8.27.2024 update, which ended at 1.3267 high. It favors pullback in 7 or 11 swings and remain supported above 1.2666 low to resume rally. #Elliottwave #Forex $USDX pic.twitter.com/L3NuzGB8lC

— Elliottwave Forecast (@ElliottForecast) September 9, 2024

Strategy Recommendation: Focus on Short Positions

Given the bearish technical setup, the recommended strategy is to consider short positions below the pivot point at $1.31413. The market remains vulnerable to downside risks, especially in the absence of strong positive catalysts. Taking profit is advised at $1.30520, aligning with the immediate support level. To safeguard against any potential upside risk, a stop-loss should be placed just above the first resistance level at $1.31878.

Key Data to Watch This Week:

• Tuesday, Sep 10: GBP Claimant Count Change, expected to rise to 95.5K, could further weigh on the pound.
• Tuesday, Sep 10: UK Unemployment Rate, expected to remain steady at 4.1%.
• Tuesday, Sep 10: US NFIB Small Business Index, expected to come in at 93.6, providing further insight into US economic resilience.

The interplay between these economic data points, especially in the UK and US, will shape the market’s sentiment. Continued weakness in the UK economy, along with a relatively stable US job market, suggests that the GBP/USD pair will remain under pressure in the near term.