CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

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

Article By: ,  Market Analyst
Today 10:13 AM

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

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024