GBP/USD languishes near its lowest level since November 2023, around 1.2200 mark

FXStreet
Updated
Mitrade
coverImg
Source: DepositPhotos


  • GBP/USD struggles to register any meaningful recovery and seems vulnerable to slide further.


  • Stagflation fears and UK fiscal concerns continue to weigh on the GBP amid a bullish USD. 


  • The upbeat US jobs data reinforced hawkish Fed bets and pushed the USD to a two-year top.


The GBP/USD pair enters a bearish consolidation phase at the start of a new week and languishes near its lowest level since November 2023 touched on Friday, around the 1.2200 mark during the Asian session. Moreover, the fundamental backdrop seems tilted in favor of bearish traders and suggests that the path of least resistance for spot prices remains to the downside. 


The British Pound (GBP) continues with its relative underperformance in the wake of concerns over stagflation in the UK amid stubborn inflation and stalling growth. Furthermore, the recent rise in the UK government bond yields has raised anxiety about the UK’s fiscal health, which is seen as another factor undermining the GBP and validates the negative outlook for the GBP/USD pair amid a bullish US Dollar (USD).


In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, shot to over a two-year top on Friday in reaction to the upbeat US jobs data. The Nonfarm Payrolls (NFP) report showed that the US economy added 256K jobs in December, surpassing even the most optimistic estimates, while the Unemployment Rate unexpectedly dipped to 4.1%, reinforcing hawkish Federal Reserve (Fed) expectations. 


Investors now seem convinced that the Fed will pause its rate-cutting cycle at its policy meeting later this month and are also pricing in the possibility of an interest rate hike later this year. The outlook remains supportive of elevated US Treasury bond yields, which, along with the risk-off impulse, supports prospects for a further appreciating move for the safe-haven buck and additional losses for the GBP/USD pair. 


That said, a slightly oversold Relative Strength Index (RSI) on the daily chart makes it prudent to wait for some consolidation or a modest bounce before positioning for the next leg of a downfall. Nevertheless, the GBP/USD pair seems vulnerable to weaken further towards testing sub-1.2100 levels, or the November 2023 swing low, in the absence of any relevant economic data from the UK or the US.

* The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

goTop
quote
Do you find this article useful?
Related Articles
placeholder
GBP/USD Price Forecast: Hovers around 1.2950 near nine-day EMAThe GBP/USD pair holds steady after gains in the previous session, hovering around 1.2950 during Friday's Asian trading hours.
Author  FXStreet
Mar 28, Fri
The GBP/USD pair holds steady after gains in the previous session, hovering around 1.2950 during Friday's Asian trading hours.
placeholder
GBP/USD rises above 1.2900 as US yields decline, Q4 GDP Annualized report eyedGBP/USD recovers its recent losses from the previous session, climbing to around 1.2910 during Thursday’s Asian session.
Author  FXStreet
Mar 27, Thu
GBP/USD recovers its recent losses from the previous session, climbing to around 1.2910 during Thursday’s Asian session.
placeholder
Pound Sterling declines after UK employment data, BoE policy awaitedThe Pound Sterling (GBP) faces selling pressure against its major peers, except antipodeans, on Thursday after the release of the United Kingdom (UK) labor market data for three months ending January.
Author  FXStreet
Mar 20, Thu
The Pound Sterling (GBP) faces selling pressure against its major peers, except antipodeans, on Thursday after the release of the United Kingdom (UK) labor market data for three months ending January.
placeholder
GBP/USD snaps winning streak as Cable markets take a breatherGBP/USD faltered on Thursday, ending a stellar three-day run that saw the Pound Sterling gain 2.57% bottom-to-top against the Greenback from the start of the week.
Author  FXStreet
Mar 07, Fri
GBP/USD faltered on Thursday, ending a stellar three-day run that saw the Pound Sterling gain 2.57% bottom-to-top against the Greenback from the start of the week.
placeholder
Pound Sterling strengthens on upbeat UK GDP data, risk-on market moodThe Pound Sterling (GBP) strengthens in Thursday’s European session due to multiple tailwinds, such as upbeat United Kingdom (UK) data and a cheerful market mood.
Author  FXStreet
Feb 13, Thu
The Pound Sterling (GBP) strengthens in Thursday’s European session due to multiple tailwinds, such as upbeat United Kingdom (UK) data and a cheerful market mood.
Real-time Quote