CFD Trading Rate Great Britain Pound vs US Dollar (GBPUSD)

• Exhaustion signals as GBP/USD stalls after a 400-pip rally, with RSI indicating overbought conditions.
• A daily close below 1.3200 could trigger a pullback, with support levels at 1.3130, 1.3100, and further down at 1.3043.
• If the pair breaks above 1.3230, resistance levels to watch are 1.3250 and the psychological 1.3300 mark.

The Pound Sterling begins the week on a positive note, yet remains hovering around the 1.3200 figure, unable to break last Friday new year-to-date (YTD) high of 1.3230, and trades at 1.3204 almost flat.

GBP/USD Price Forecast: Technical outlook

Exhaustion is the name of the game for the GBP/USD. After achieving a 400-pip run that started on August 15^th, the pair has failed to extend its gains after hitting a multi-year peak at 1.3230. Today’s price action is forming a ‘doji,’ which indicates indecision amongst buyers and sellers.

Momentum shows buyers are losing steam as the Relative Strength Index (RSI) remains overbought. Therefore, if the GBP/USD achieves a daily close below 1.3200, that could pave the way for a deeper pullback.

In that outcome, the first support would be the August 22 high at 1.3130 before the pair slides to 1.3100. In further weakness, the GBP/USD might hit 1.3043, and July’s 17 daily high turned support.

On the other hand, if GBP/USD rises past 1.3230, the next resistance would be 1.3250, followed by the 1.3300 mark.

GBP/USD Price Action – Daily Chart

BoE Governor Bailey’s comments at Jackson Hole Friday reflected a cautious near-term policy outlook, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

BoE Gov Bailey maintains cautious policy outlook

“Bailey said it was too early to declare victory over inflation with price growth not sustainably back to target. The remarks support market pricing that suggests policymakers are likely to await more data before easing rates again late this year (November). GBP has drifted marginally lower in quiet trade, with UK markets closed for the bank holiday.”

“Cable losses are marginal from Friday’s 1.3230 high (highest since early 2022). Spot is consolidating ahead of minor trend support at 1.3178; weakness below trend support today could prompt a deeper correction in Cable but trend dynamics here remain bullish, suggesting limited scope for weakness for now—and the potential for gains to extend to 1.3330 moving ahead.”

“Cable support looks firm at 1.3125/30.”

As long as 1.3160 is not breached, there is room for GBP to test 1.3250, after which the advance might pause, UOB Group FX strategists Quek Ser Leang and Lee Sue Ann note.

The 1.3250 resistance is the next target

24-HOUR VIEW: “We did not anticipate GBP to soar last Friday (we were expecting range trading). The sharp and swift rise during NY trade seems to be running ahead of itself. However, as long as 1.3160 is not breached, there is room for GBP to test 1.3250, after which the advance might pause. The next major resistance at 1.3300 is unlikely to come into view. To keep the momentum going, GBP must not break below 1.3165 (minor support is at 1.3185).”

1-3 WEEKS VIEW: “The level to monitor is 1.3320. Last Thursday (22 Aug, spot at 1.3090), we indicated that ‘the recent price action suggests there is scope for GBP to rise to, and potentially break above the 2023 peak of 1.3144.’ We added, ‘the next level to monitor above 1.3144 is 1.3200.’ While our view of a higher GBP was correct, the speed of its advance exceeded our expectations, as it surged by 0.94% last Friday (NY close of 1.3216) and closed at its highest level since February 2022. Not surprisingly, the sharp and rapid rise is coupled with strong momentum. In other words, we continue to expect GBP to rise. The next level to monitor is 1.3320. We will maintain our view of a higher GBP provided that 1.3105 (‘strong support’ level was at 1.2970 last Friday) is not breached.”

• GBP/USD trades in positive territory for the eighth consecutive day near 1.3215 in Monday’s early Asian session. 
• Fed’s Powell signalled for a September rate cut but did not mention about the size and pace of the rate cut. 
• BoE’s Bailey said it’s still too early to declare victory on inflation.

The GBP/USD pair trades on a stronger note around 1.3215 during the early Asian session on Monday. The signal that the US Federal Reserve (Fed) will start easing its monetary policy in September drags the Greenback lower and supports GBP/USD. Market players await the US Durable Goods Orders for July, which are due later on Monday. 

At Jackson Hole on Friday, Fed Chair Jerome Powell gave a clear signal that the FOMC will cut the target range for the Federal Funds Rate at their next meeting on September 17-18 as inflation is on a sustainable path back to the 2% target. Nonetheless, Powell did not want to provide a hint about the size of the rate cut in September and the pace of the rate cut this year as the Fed remains data-dependent. 

The firmer bets of the Fed rate cuts continue to undermine the Greenback and create a tailwind for GBP/USD. Rabobank analysts noted that they expect the labor market to worsen further in the remainder of the year, triggering four consecutive rate cuts of 25 basis points (bps) each in the September, November, December and January meetings. 

On the other hand, the speculation that the Bank of England’s (BoE) policy-easing cycle will be slower than that of other major central banks provides some support to the Pound Sterling (GBP). BoE Governor Andrew Bailey said late Friday that inflation remains a major concern for the UK central bank, although many pricing pressures have eased quicker than expected. Bailey noted that it is premature to declare victory on inflation.