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
EUR/GBP falls below 0.8650 on fears over France’s political crisisThe EUR/GBP cross attracts some sellers to near 0.8645 during the early European session on Monday.
Author  FXStreet
23 hours ago
The EUR/GBP cross attracts some sellers to near 0.8645 during the early European session on Monday.
placeholder
GBP/USD holds positive ground above 1.3550 as potential Fed rate cut loomsThe GBP/USD pair posts modest gains near 1.3555 during the early Asian session on Monday.
Author  FXStreet
Yesterday 02: 18
The GBP/USD pair posts modest gains near 1.3555 during the early Asian session on Monday.
placeholder
Pound Sterling gains against its peers amid upbeat market moodThe Pound Sterling (GBP) trades higher against its major currency peers, except antipodeans, on Wednesday.
Author  FXStreet
Sep 10, Wed
The Pound Sterling (GBP) trades higher against its major currency peers, except antipodeans, on Wednesday.
placeholder
GBP/USD strengthens above 1.3550, investors await NFP Benchmark Revision releaseThe GBP/USD pair gathers strength to around 1.3560, the highest since August 15, during the early European session on Tuesday.
Author  FXStreet
Sep 09, Tue
The GBP/USD pair gathers strength to around 1.3560, the highest since August 15, during the early European session on Tuesday.
placeholder
Pound Sterling gains against US Dollar on intensifying Fed dovish betsThe Pound Sterling (GBP) trades firmly near 1.3500 against the US Dollar (USD) during the European trading session on Monday.
Author  FXStreet
Sep 08, Mon
The Pound Sterling (GBP) trades firmly near 1.3500 against the US Dollar (USD) during the European trading session on Monday.
Real-time Quote