GBP/USD price falters below key $1.23 resistance amid UK fiscal concerns
GBP/USD trades at 1.2175, maintaining its bearish trend below 1.23 resistance
The GBP/USD pair started the week with a brief rise during the Asian session, but quickly reversed course during European trading, continuing its alignment with the broader bearish trend.
At present, GBP/USD is trading at 1.2175, reflecting a market that remains hesitant and lacks clear bullish momentum. The pair has been trading in a range for the past week, hovering below the key 1.23 resistance level and finding support around 1.21.
The lack of a clear upward momentum is influenced by broader macroeconomic factors, particularly in the U.S. and the UK. Investors are focused on the policies of U.S. President-elect Donald Trump, whose protectionist stance raises concerns about inflationary pressures. This has led to speculation that the Federal Reserve may take a more hawkish approach, potentially halting its rate-cutting cycle later this month. With the Fed’s potential policy shift in play, the U.S. dollar could hold firm, limiting any substantial downside for the currency.
GBP/USD price movement (Dec 2024 – Jan 2025) Source: TradingView.
Meanwhile, in the UK, mixed economic data and fears of stagflation have increased expectations of a 25-basis-point rate cut by the Bank of England (BoE) on February 6. These concerns are compounded by fears of stagflation and broader fiscal instability, which could keep traders cautious about placing bullish bets on GBP/USD.
The GBP/USD price outlook: RSI points to further downside objective
From a technical perspective, GBP/USD faces strong resistance at 1.23, reinforced by the 100-period Exponential Moving Average (EMA) on the 4-hour chart. The Relative Strength Index (RSI) on both the 4-hour and daily charts remains in bearish territory, pointing to limited upside potential. The pair has also remained below its nine- and 14-day EMAs, confirming its bearish momentum.
With these factors in play, the outlook for GBP/USD remains uncertain. A significant move beyond the 1.23 resistance is unlikely without a more substantial shift in market sentiment or economic data. Until then, the pair is likely to remain range-bound, constrained by resistance at 1.23 and support at 1.21. While the market awaits Trump's inaugural speech, the risk of further downside remains, as long as broader concerns over fiscal health and monetary policy persist.
The GBP/USD price faced selling pressure and traded near 1.223 during Friday’s Asian session.The pair remained below the nine- and 14-day EMAs, confirming its bearish momentum.
