The positive economic data from the UK and BoE rate rise bets have failed to support the GBP.
GBP/USD Technical Outlook : Downward biased as bears eye at 1.2850
The British Pound is heading into the weekend with record losses. Wall Street’s bell signals that the end of a busy week has come and gone. Market sentiment was dominant, but not macroeconomics, or sometimes central banks. The trading day on Friday was a continuation of the week’s tone. There were reports from Russia that their President Putin had seen “certain positive changes” in talks with Ukraine. However, the Ukraine Foreign Minister said the opposite. The GBP/USD trades at 1.3035, a decrease of 0.39%.
US equities closed this week in the red. The S&P 500 and Dow Jones were down 1.30% and 0.69% respectively, while the Nasdaq was down 2.18%. The US Dollar Index shows that the greenback will finish the week at 100. This is a negative sign for the GBP/USD.
Overnight, GBP/USD sank to November 2020 lows at 1.31050. In fact, it reacted to UK economic releases and reached a daily high of 1.3139. It then followed the path of least resistance and fell below the handle of 1.3100, printing a new YTD lowest at 1.3027.
The European session featured data from the UK’s economic docker. The 0.8% increase in UK GDP in January was more than the 0.2% contraction recorded in December. The 0.8% increase in manufacturing activity influenced January’s 0.7% rise in Industrial Production. Services sector grew 0.8% more than December’s -0.5% decline.
The US economic docket included the University of Michigan Consumer Sentiment March. It declined from 62.8 in Feb to 59.7 in March. Inflation expectations rose from 4.9% to 5.4% in the previous reading. This is the lowest reading since November 2011, when inflation expectations rose sharply because of a spike in fuel prices caused by the Russian invasion.
GBP/USD Forecast: Technical outlook
The GBP/USD is now downward biased. This was further accentuated by the breaking of the December 8th, 2021 swing low at 1.3160. It was tested unsuccessfully in the previous trading days. The GBP/USD also broke below the bottom trendline of a downward channel, which could lead to a lower move.
The GBP/USD would support 1.3000 as its first support. The psychological 1.2900 mark would be breached, followed by the November 2, 2020 low at 1.2853 and the September 2020 lows of 1.2675.
