**GBP/USD Price Forecast: Pound Slides Below 1.34 as Dollar Strengthens**
*By TradingNews.com Staff*
**Overview**
The British pound (GBP) faced renewed pressure against the US dollar (USD), sliding below the 1.34 level amid broad dollar strength and persistent concerns regarding the UK’s economic outlook. This steep move marks a continuation of the recent bearish trend for the GBP/USD currency pair, which has struggled to recover significant ground after earlier declines. A combination of hawkish signals from the Federal Reserve, ongoing geopolitical uncertainties, and domestic headwinds in the UK have worked in tandem to drive the pair lower.
This article, inspired by coverage from TradingNews.com, examines the latest price action, fundamental drivers, and future outlook for the GBP/USD.
**GBP/USD: Recent Price Action**
After an attempt to recover in early sessions of the week, the pound was unable to maintain momentum, dropping sharply below the psychologically important 1.34 level. This descent reflects a broader risk-off sentiment in the FX market as investors flock to the US dollar, boosting its value relative to major peers like the British pound.
Key recent performance highlights:
– GBP/USD dropped more than 1% in daily trading to touch lows near 1.3360.
– Downward momentum has been dominant since the start of the month, with short-lived rallies quickly fading.
– The pair has underperformed against the euro and several risk-on currencies, as well as the safe-haven US dollar.
**Major Drivers Behind the GBP/USD Decline**
Several overlapping factors have contributed to the ongoing pressure on the British pound. From monetary policy divergence to macroeconomic concerns, traders and investors are recalibrating expectations for the currency pair.
*1. Federal Reserve’s Hawkish Stance*
The US dollar has benefitted significantly from aggressive signals by the Federal Reserve, as FOMC officials hint at continued rate hikes to combat persistent inflation. The resulting yield premium on US assets has lured global investors toward the dollar, pressuring GBP/USD lower.
– Federal Reserve Chair Jerome Powell and colleagues have reaffirmed their commitment to bringing inflation under control.
– Markets have priced in at least two additional rate hikes over the coming months.
– Yields on US Treasuries have risen to multi-year highs, driving capital inflows.
*2. UK Economic Concerns*
The UK economy faces a challenging backdrop, with rising recession risks and subdued consumer sentiment casting a shadow over sterling.
– Recent data shows UK GDP growth remains sluggish. Most sectors are struggling to rebound to pre-pandemic levels.
– Inflation has eased but remains uncomfortably above the Bank of England’s target.
– The Bank of England has been more cautious in its tightening cycle compared to the Fed, leading to diverging rate expectations.
*3. Geopolitical Uncertainty and Risk Aversion*
Heightened geopolitical tensions, including ongoing conflict in Eastern Europe and global trade frictions, are amplifying investor risk aversion, boosting demand for the US dollar as a safe-haven asset.
– Concerns regarding potential energy supply disruptions continue to weigh on the UK and broader European economies.
– UK political instability, including the aftermath of recent elections and uncertainties over economic policy, have compounded the risk premium on sterling.
**Technical Analysis: Support and Resistance Levels**
A review of the GBP/USD daily chart highlights critical levels and patterns worth monitoring as the bearish trend persists.
*Key Support Levels:*
– 1.3350: The recent intraday low, providing initial support. A decisive break below this area could accelerate losses.
– 1.3265: The next major support zone, representing a multi-month low from earlier this year.
– 1.3200: Psychological round-number support, which may attract buyers in the event of further selling.
*Key Resistance Levels:*
– 1.3450: Short-term resistance capped recent rebound attempts.
– 1.3550: A pivotal level representing the breakdown point from last
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