GBP/USD Halts Selloff to Carve Bullish Engulfing Candlestick
GBP/USD may attempt to retrace the decline from the monthly high (1.2550) as it seems to be carving a bullish engulfing candlestick formation.
Share this:
US Dollar Outlook: GBP/USD
GBP/USD bounces back from a fresh weekly low (1.2333) to halt a three-day selloff, and the exchange rate may attempt to retrace the decline from the monthly high (1.2550) as it seems to be carving a bullish engulfing candlestick formation.
GBP/USD Halts Selloff to Carve Bullish Engulfing Candlestick
GBP/USD retraces the decline from the start of the week as Federal Reserve Jerome Powell tells US lawmakers that ‘we do not need to be in a hurry to adjust our policy stance’, and it seems as though the Federal Open Market Committee (FOMC) will gradually move towards a neutral stance despite the ongoing change in US trade policy.
Join David Song for the Weekly Fundamental Market Outlook webinar.
David provides a market overview and takes questions in real-time. Register Here
In turn, the US Dollar may face headwinds ahead of the next Fed meeting in March as the central bank appears to be on track to implement lower interest rates in 2025, and data prints coming out of the US may fuel the recent rebound in GBP/USD as the Consumer Price Index (CPI) is anticipated to show easing inflation.
US Economic Calendar
Even though the headline CPI is seen holding steady at 2.9% in January, the core rate is expected to narrow to 3.1% from 3.2% per annum the month prior, and indications of slowing price growth may produce a bearish reaction in the US Dollar as it fuels speculation for an imminent Fed rate-cut.
However, a higher-than-expected CPI print may push the FOMC to further combat inflation, and signs of persistent price growth may curb the recent rebound in GBP/USD as it raises the central bank’s scope to keep US interest rates on hold.
With that said, GBP/USD may continue to track the negative slope in the 50-Day SMA (1.2485) amid the failed attempt to close above the moving average, but the exchange rate may stage further attempts to test the January high (1.2576) should it push above the opening range for February.
GBP/USD Price Chart –Daily
Chart Prepared by David Song, Senior Strategist; GBP/USD on TradingView
- A bullish engulfing candlestick formation takes shape as GBP/USD climbs to a fresh weekly high (1.2430), with a break/close above the 1.2390 (38.2% Fibonacci extension) to 1.2446 (May low) zone bringing the monthly high (1.2550) on the radar.
- A breach above the January high (1.2576) opens up the 1.2710 (23.6% Fibonacci extension) to 1.2760 (61.8% Fibonacci retracement) region, but lack of momentum to break/close above the 1.2390 (38.2% Fibonacci extension) to 1.2446 (May low) zone may keep GBP/USD below the 50-Day SMA (1.2485).
- Failure to hold above the 1.2300 (50% Fibonacci retracement) to 1.2310 (61.8% Fibonacci extension) region may push GBP/USD towards the monthly low (1.2249), with the next area of interest coming in around the January low (1.2100).
Additional Market Outlooks
USD/JPY Rebound Keeps RSI Above Oversold Zone Ahead of Fed Testimony
Canadian Dollar Forecast: USD/CAD Remains Susceptible to Trump Tariffs
GBP/USD Vulnerable amid Failure to Close Above 50-Day SMA
AUD/USD Recovery Stalls Ahead of January High
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
Related tags:
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
EUR/USD forecast remains tilted lower with French bond troubles ahead of US jobs report
The EUR/USD has tagged a fresh year-to-date low as French public-finance concerns trigger a government bond sell-off. Today's US jobs report may change little, with resilient activity, elevated energy prices and hawkish Fed bets keeping the greenback supported. With the pair trapped below resistance at 1.1410, the risk to the near-term EUR/USD forecast is tilted to the downside.
USD/CAD shooting star puts September surge on notice
USD/CAD has printed a clear bearish reversal pattern after an extraordinary September surge, but confirmation may depend heavily on how US Treasury yields react to Friday’s payrolls report.
USD/CHF Reverses as Swiss Franc Surges amid Bond Carnage
USD/CHF reverses from channel resistance as bond volatility surges and broad Swiss franc strength points to a possible carry-trade unwind.
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 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.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.