GBP/USD Price Analysis – Nov 18, 2024
Daily Price Outlook
The Pound Sterling recovers marginally following dismal UK GDP-driven selling on Friday.
The Pound Sterling (GBP) edged higher against its major peers on Monday, attempting to regain ground after Friday's sell-off. The British pound plummeted dramatically when the Office for National Statistics (ONS) reported that the GDP unexpectedly shrunk by 0.1% in September. The figures also showed that the economy increased slowly in the third quarter.
The unexpected dip in UK GDP may lead to further interest rate reduction by the Bank of England (BoE).
Markets will be focusing almost entirely on the services inflation figure, which the analysts expect to rise somewhat from 4.9% to 5.0%. However, when we remove sectors that are less relevant to the Bank of England, 'core services' inflation falls significantly to 4.3%.
That would be good news for the BoE, but not likely enough to warrant another cut in December. In addition, markets may focus more on the 'non-core' services CPI data, maintaining to cautious BoE pricing and putting a cap on the recent modest bounce in EUR/GBP.
The UK's economic future is projected to become more uncertain as the government struggles to decide between increasing trade links with the European Union (EU) and the United States.
UK Faces Economic Dilemma Between EU and US Models as GBP Struggles Amid Strong USD
The United Kingdom is caught between these two types of economic models, and I believe the country would benefit from adopting more of the American model of economic independence. And if that were the case, Moore believes it would increase the Trump administration's desire to pursue the free trade pact with the UK. His remarks came as BoE Governor Andrew Bailey encouraged the administration to rebuild relations with the European Union.
During Monday's London session, the pound sterling remained under pressure near 1.2600 against the US dollar. The GBP/USD pair struggles to find traction as the US Dollar maintains gains near a more-than-a-year high, while the US Dollar Index (DXY) hovering around 107.00.
The greenback trades firmly as investors expect the Federal Reserve (Fed) to take a more cautious rate-cutting approach given the recent minor rise in inflation and the growth forecast based on strong anticipation that President-elect Donald Trump would be able to carry out his economic program efficiently.
GBP/USD – Technical Analysis
The GBP/USD pair is trading at $1.26203, up a modest 0.03% on the day, as it consolidates within a tight range near critical support levels. The pivot point at $1.26900 serves as a key hurdle for the pair, and a breakout above this level could open the door to immediate resistance at $1.27452.
If bullish momentum persists, the next upside targets are $1.27924. However, the downside remains vulnerable, with immediate support at $1.25957, followed by stronger support at $1.25073 and $1.24513.
The 50-day Exponential Moving Average (EMA) at $1.30541 reflects a bearish trend in the broader outlook, as prices remain well below this longer-term indicator. The Relative Strength Index (RSI) is currently at 30, signaling that the pair is oversold, which could set the stage for a potential technical rebound.
In the 4-hour chart, GBP/USD shows signs of downward pressure as it trades below the pivot point. A buy-limit entry at $1.26095 could offer traders a strategic opportunity, targeting a take-profit level of $1.26911. However, caution is warranted, with a stop-loss placed at $1.25462 to limit downside risk.
Related News
- GOLD Price Analysis – Nov 18, 2024
JOIN LONGHORNFX TODAY
24/7 live support, lightning fast withdrawals, guaranteed safe and reliable trading platforms with a true ECN broker.