GBPUSD Forecast: Pound Slips Amid GDP Contraction, Eyeing Critical Support Level

Key Events

Markets are bracing for final central bank decisions and insights for 2024 ahead of the holiday season
UK GDP contracted by -0.1%, raising questions ahead of Thursday’s BOE decision
FOMC and BOJ meetings next Wednesday and Thursday are expected to heighten market volatility
Key GBP events to watch: Flash PMI (Monday), employment data (Tuesday), and the BOE decision (Thursday)

US Data

Following the uptick in US CPI and PPI data, and the market’s priced in a Fed rate cut for next week, the US Dollar index stabilized above the 107-mark again. If the 108-resistance zone is breached, currencies may face critical lows, prompting central banks to adopt aggressive measures to stabilize their economies. Banks like the SNB, BOC, and PBOC have already announced drastic actions, with the ECB potentially following suit ahead of risks tied to Trump's policies in 2025.

UK Data

Expectations of a BOE rate hold have been driven by inflationary pressures from the UK’s new labor law. However, the contraction in GDP to -0.1% heightens concerns about economic growth and complicates the BOE’s decision-making process. Increased volatility in the British pound is expected next week, influenced by flash PMI data on Monday and employment figures on Tuesday, which will play a final pivotal role in shaping BOE insights.

Technical Analysis: Quantifying Uncertainties

GBPUSD Forecast: Weekly Time Frame – Log Scale

Source: Tradingview

Using the Fibonacci extension tool between the 2021 high, 2022 low, and 2024 high, the recent drop in GBPUSD has found support at the 0.272 extension level. The next significant support level lies at the 0.382 extension. Should GBPUSD fail to sustain its rebound above the critical 1.2480 level, further declines could test support zones between the October 2023 and February 2023 lows, with support zones 1.21 and 1.19.

On the upside, the current candlestick pattern forming above the 1.25 support indicates a weekly bullish engulfing pattern, signaling strong reversal potential. Key resistance levels to watch to resume a bullish scenario include 1.30 and 1.3170.

--- Written by Razan Hilal, CMT on X: @Rh_waves and Forex.com You Tube

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.