The GBP/USD exchange rate continues to struggle, hovering near a multi-month low. This instability is largely attributed to the contrasting monetary policies of the United States and the United Kingdom. The Federal Reserve’s recent signals suggest a more hawkish stance, with indications that interest rate cuts will be gradual going into 2025. In contrast, the Bank of England’s recent decision to keep rates unchanged, supported by a dovish outlook, has undermined the value of the British Pound.
During the Asian trading session on Tuesday, the GBP/USD pair attempted to consolidate below the mid-1.2500 range, remaining close to its lowest point since May, reached last week. The technical landscape indicates that bearish sentiment is prevailing, particularly following repeated rejections near the 200-period Simple Moving Average (SMA) on the 4-hour chart. The absence of significant buying pressure reinforces a downward trajectory for the currency pair.
From a technical analysis perspective, the presence of oscillators in negative territory suggests further downside potential for GBP/USD . A dip below the psychological support level of 1.2500 could lead to extended selling pressure, possibly targeting the swing low around 1.2445. If this support fails, the pair could test the 1.2400 level en route to the yearly low near 1.2300. This latter figure is anticipated to provide a solid base, but the current trading environment’s low volumes may intensify volatility.
Conversely, should the GBP/USD pair manage to surpass the immediate resistance at 1.2600, this could trigger short-covering and push prices toward the 200-period SMA, currently near 1.2680. A decisive break above the 1.2700 level would pave the way for a more robust recovery, with targets set at the 1.2735 resistance and the supply zone ranging from 1.2775 to 1.2780.
