GBP/USD Price Outlook: Struggles Near 1.2400, Remains Weak Below 50-Day SMA.

GBP/USD Price Analysis: Struggles Near 1.2400 as USD Strength Caps Gains

The GBP/USD pair has rebounded slightly from its Asian session low, currently trading around the 1.2400 level, remaining largely unchanged for the day. However, upside momentum appears limited due to the strengthening US Dollar (USD), signaling potential weakness for the British Pound (GBP).

Key Factors Impacting GBP/USD

1. Stronger US Dollar Amid Tariff Concerns
   Recent tariff threats from former US President Donald Trump have increased demand for the safe-haven USD, putting pressure on risk-sensitive currencies like the GBP.

2. US Economic Data and Federal Reserve Outlook
   The strong US employment report released last Friday, combined with expectations that Trump’s trade policies could fuel inflation, supports the likelihood of the Federal Reserve (Fed) maintaining its current interest rates. This further boosts the USD’s strength and limits GBP/USD upside potential.

3. Bank of England’s Gloomy Economic Outlook
   The Bank of England (BoE) has expressed concerns over economic growth, reinforcing a bearish outlook for the British Pound. This adds another layer of resistance to GBP/USD’s recovery attempts.

Technical Analysis: GBP/USD Struggles Below Key Resistance

From a technical perspective, repeated failures to break above the 50-day Simple Moving Average (SMA) suggest that the path of least resistance remains to the downside. Any short-term GBP/USD rally is likely to face selling pressure, especially near the 1.2500 psychological barrier, which serves as a key pivot point for traders.

• Bullish Breakout Scenario: A sustained move above 1.2500 could drive GBP/USD towards the 1.2575–1.2580 zone, with further upside potential targeting 1.2600 and the next resistance at 1.2645–1.2650. A decisive break above this level could see the pair test the 100-day SMA near 1.2715–1.2720.

• Bearish Breakdown Scenario: A drop below the immediate support at 1.2375–1.2370 would expose GBP/USD to further declines below 1.2300, potentially testing last week’s swing low around mid-1.2200s. If bearish momentum continues, the pair could head toward the 1.2175 support zone.

Outlook: GBP/USD Remains Vulnerable Below 50-Day SMA

With the US Dollar strengthening and technical resistance holding firm, GBP/USD remains at risk of further declines. Traders should watch key levels such as 1.2500 for potential upside and 1.2370 for a bearish breakdown, as market sentiment continues to evolve around US economic data and Federal Reserve policy expectations.

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