GBP/USD Price Forecast: Hovers around 1.2400; seems vulnerable while below 50-day SMA
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GBP/USD struggles to capitalize on intraday uptick amid a modest USD strength.
The divergent Fed-BoE outlook further contributes to capping the currency pair.
The setup seems tilted in favor of bears and supports prospects for deeper losses.
The GBP/USD pair rebounds a few pips from the Asian session low and currently trades around the 1.2400 round-figure mark, nearly unchanged for the day. The upside, however, remains capped in the wake of a modest US Dollar (USD) strength, which, in turn, warrants some caution for bullish traders.
US President Donald Trump's fresh tariff threats boost demand for the traditional safe-haven Greenback. Meanwhile, the upbeat US employment details released on Friday, along with expectations that Trump's protectionist policies would reignite inflation, should allow the Federal Reserve (Fed) to hold rates steady and lend additional support to the USD. Apart from this, the Bank of England's (BoE) gloomy outlook should contribute to capping the GBP/USD pair.
Even from a technical perspective, the recent repeated failures near the 50-day Simple Moving Average (SMA) suggest that the path of least resistance for the GBP/USD pair is to the downside. Hence, any subsequent move up could be seen as a selling opportunity and remain capped near the 1.2500 psychological mark. The latter should act as a key pivotal point for short-term traders, which if cleared decisively should pave the way for additional near-term gains.
The GBP/USD pair might then accelerate the positive move towards the 1.2575-1.2580 region en route to the 1.2600 round figure. The momentum could extend further towards the 1.2645-1.2650 intermediate hurdle, above which spot prices could aim to challenge the 100-day SMA, currently pegged near the 1.2715-1.2720 region.
On the flip side, weakness below the 1.2375-1.2370 immediate support could make the GBP/USD pair vulnerable to weaken further below the 1.2300 round figure, towards testing last week's swing low, around mid-1.2200s. Some follow-through selling should pave the way for a fall toward the next relevant support near the 1.2175 region.
GBP/USD daily chart
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