GBP/USD Forecast: Pound Sterling Sinks as US Dollar Recoils
GBP/USD FORECAST: POUND STERLING PRESSURED AHEAD OF BREXIT TALKS, US DOLLAR SELLOFF STABILIZES
- GBP/USD might target February lows near 1.2850 after spot prices quickly reversed lower off the 1.3000 handle
- The Pound Sterling faces downward pressure with the restart of Brexit negotiations next week looming over GBP price action
- The US Dollar has started to rebound broadly as coronavirus concerns look to trump a rise in Fed rate cut bets
GBP/USD has slid markedly so far during Wednesday’s trading session amid broad-based weakness in the Pound Sterling and strength in the US Dollar.
Uncertainty that surrounds upcoming Brexit talks next week could explain the latest bit of downside in GBP price action. Meanwhile, coronavirus concerns linger and likely underscore sustained demand for safe-haven currencies like the USD.
GBP/USD PRICE CHART: DAILY TIME FRAME (SEPTEMBER 2019 TO FEBRUARY 2020)
I noted in a Pound Sterling forecast published last week that spot GBP/USD prices were hovering around the 200-day exponential moving average, which showed potential to keep the cable bolstered.
GBP/USD initially bounced off this technical support zone, but the Pound Sterling has since slid lower against the US Dollar by about 100-pips after the major currency pair touched the 1.3000 handle.
Technical resistance around the 1.3000 mark is plentiful. This area of confluence, highlighted by the 50-DMA and 38.2% Fibonacci retracement level of the October to December rally last year, has strong potential to keep GBP/USD price action bogged down.
GBP/USD PRICE CHART: 4-HOUR TIME FRAME (JANUARY 2020 TO FEBRUARY 2020)
Shifting gears to a 4-hour GBP/USD chart brings to light three prominent swing lows printed this month between 1.2850-1.2900.
A drop below this region could open up the door for further downside in spot GBP/USD prices and encourage British Pound bears to target November lows near the 1.2800 handle.
On the other hand, a rebound off this level of technical confluence could send GBP/USD price action back toward the February 25 intraday swing high.
— Written by Rich Dvorak, Junior Analyst for DailyFX.com
Connect with @RichDvorakFX on Twitter for real-time market insight