Since the start of this week's trading, the price of the GBP/USD pair has been on a downward correction path with losses that extended to the support level of 1.2544, abandoning the gains of the relatively upward rebound that affected last week. The resistance level of 1.2732 is its highest in three months.
Thus, it was normal for the recent selling operations. Technically, the indicators moved towards overbought levels after last week's gains. At the same time, the US dollar is recovering ahead of the announcement of important US jobs numbers at the end of the week, which will have a strong and direct reaction to the future tightening of the US Central Bank's policy. Therefore, the pound lost less compared to other currencies such as the euro, as the Bank of England still rules out the date of cutting interest rates.
According to Forex tradings, the US dollar was stronger against the British pound and other major currencies. Obviously, that was after a survey of the US economy showed continued growth in November and warned market participants of excessive Fed rate cut expectations. consequently, the sterling dollar was negatively affected after the ISM survey of the services sector recorded a strong level at 52.7. As shown, it has been exceeded analysts’ expectations of 52 and represents an increase in activity from 51.8 in October. Demonstrably, a reading above 50 is consistent with growth, confirming that the overall growth rate in the largest sector of the US economy remains healthy.
On another level, Mortgage rates fell as Treasury yields fell amid hopes that the Federal Reserve may finally end its US interest rate hike campaign, which aims to control high inflation. Also, Wall Street markets are betting that the Fed's next step will be to cut US interest rates, perhaps as early as March, which would stimulate the economy and financial markets.
Shortly, more reports arrived on Wednesday, raising those hopes. With the next Fed meeting on interest rates scheduled to be held within a week, widespread expectations are to leave US interest rates at their highest level in more than two decades.
Furthermore, one of the ADP reports added that private sector employers added fewer jobs last month than economists had anticipated. meanwhile, no one on Wall Street wants to see widespread layoffs, a slowdown in the job market could alleviate upward pressure on inflation. A more comprehensive report on the Labor market from the U.S. government is set to be released tomorrow, Friday, and it could cause significant volatility in Wall Street markets.
GBPUSD Expectations and Analysis Today:
GBP/USD forecasts show that it is witnessing a natural downward correction after its recent strong gains, which moved the technical indicators towards strong overbought levels. Also, er noted the possibility of this happening since it crossed the 1.2700 resistance. GBPUSD may remain on its current path until the markets and investors react to the announcement. Moreover, the important US job numbers tomorrow, which will have a strong and direct impact on the future tightening of the US Central Bank’s policy. Currently, according to the performance on the daily chart and after the recent selling operations, there has been no strong break in the general upward trend. Clearly, and this may happen if the currency pair moves towards the support levels of 1.2500 and 1.2430, respectively. Shortly, the complete abandoning the upward trend and emphasizing the bearish trend requires moving towards the support level 1.2300.
On the other hand, it must be considered that if lower than expected numbers for US jobs are announced, the GBP/USD may find an opportunity to return to the 1.2700 resistance again. In addition, investor sentiment towards risk appetite, the future of central bank policies and the performance of global stock markets will have an impact on the performance of the pound sterling.
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