US Dollar Forecast: GBP/USD Pulls Back from Channel Resistance
US Dollar Outlook: GBP/USD
GBP/USD appears to be pulling back from channel resistance as it fails to extend the series of higher highs and lows from earlier this week, with the Relative Strength Index (RSI) reflecting a similar dynamic as it reveres ahead of overbought territory.
US Dollar Forecast: GBP/USD Pulls Back from Channel Resistance
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GBP/USD cleared the November high (1.2733) as the Federal Reserve forecasts lower US interest rates in 2024, but the failed attempt to the test the August high (1.2842) may keep the exchange rate within the ascending channel from earlier this year as it continues to pullback from a fresh monthly high (1.2794).
US Economic Calendar
Nevertheless, data prints coming out of the US may produce headwinds for the Greenback as the Personal Consumption Expenditure (PCE) Price Index is anticipated to a further slowdown in November, with the core reading, the Fed’s preferred gauge for inflation, seen narrowing to 3.4% from 3.5% per annum in October.
Evidence of easing price growth may prop up GBP/USD as it puts pressure on the Federal Open Market Committee (FOMC) to unwind the restrictive policy sooner rather than later, but a higher-than-expected core PCE reading may generate a bullish reaction in the Dollar as it encourages Chairman Jerome Powell and Co. to keep US interest rates higher for longer.
Until then, speculation surrounding Fed policy may sway GBP/USD as the Bank of England (BoE) votes 6 to 3 to keep UK interest rates at 5.25%, and the British Pound may outperform its US counterpart in 2024 as ‘three members preferred to increase Bank Rate by 0.25 percentage points, to 5.5%.’
With that said, GBP/USD may consolidate over the coming days as it fails to extend the series of higher highs and lows from earlier this week, but the exchange rate may track the positive slope in the 50-Day SMA (1.2389) as it continues to trade within the ascending channel from earlier this year.
GBP/USD Price Chart –Daily
Chart Prepared by David Song, Strategist; GBP/USD on TradingView
- The recent rally in GBP/USD seems to have stalled ahead of the August high (1.2842) as it pulls back from channel resistance, and the Relative Strength Index (RSI) may show the bullish momentum abating should it continue to reverse ahead of overbought territory.
- A close below 1.2630 (38.2% Fibonacci retracement) may push GBP/USD towards the monthly low (1.2500), with a breach of channel support opening up 1.2470 (50% Fibonacci retracement).
- Nevertheless, GBP/USD may continue to track the ascending channel from earlier this year as long as it holds above the monthly low (1.2500), but need a break/close above the 1.2760 (61.8% Fibonacci retracement) to 1.2830 (23.6% Fibonacci retracement) to bring the August high (1.2842) back on the radar.
Additional Market Outlooks
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--- Written by David Song, Strategist
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