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.
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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.
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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
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