- GBP/USD reclaims the 1.3400, as it recovers from three-days previous losses.
- A weaker US dollar boosts the British pound, despite BoE dovishness in its last monetary policy meeting.
- GBP/USD: Failure to hold 1.3400 could send the pair tumbling to the 1.3200 zone.
The British pound bounces off year-to-date lows at 1.3352, edges up 0.40%, trading at 1.3418 during the New York session at the time of writing. In the last three days, cable lost almost 2%, driven mainly by US dollar strength, influenced by higher inflation figures in the US economy, reported by the Labor Department. Also, a dovish stance perceived by investors in the last Bank of England (BoE) monetary policy meeting fueled the slide of the GBP.
US Dollar weakness boost the British pound, which reclaims the 1.3400 figure
The US Dollar Index, which measures the greenback’s performance against its peers, slides 0.03%, sitting at 95.11, acting as a headwind on the USD against the GBP.
GBP/USD Price Forecast: Technical outlook
In the daily chart, the GBP/USD pair is trading within a descending channel, approaching the bottom-trendline around the 1.3350 area. Further, the daily moving averages (DMA’s) reside above the spot price, though supporting the downward bias.
In the case of a daily close above the Thursday high at 1.3433, it could spur an upside move in the pair, towards the psychological 1.3500 area, that also coincides with the 61.8% Fibonacci retracement level, a price level that GBP/USD sellers would defend to resume the downward bias.
On the flip side, failure at 1.3433 could open the door for a further downfall in the GBP/USD pair. The first support would be the Friday low at 1.3353, followed by the bottom of the descending channel around the 1.3300 area, a level last seen in December 2020. A breach of that level would expose December 12, 2020, low at 1.3188.