**GBP/USD Holds Steady Around 1.3500, Seems Vulnerable Near Multi-Week Low**
*Originally reported by FXStreet*
The GBP/USD currency pair has remained under pressure in recent trading sessions, hovering near the key psychological support at 1.3500. This comes amid a tepid market sentiment, driven by concerns on global growth, hawkish Federal Reserve expectations, and ongoing Brexit-related uncertainties. Investors are increasingly cautious, leading to a subdued tone around the British Pound against the US Dollar.
## Key Themes and Market Drivers
**1. Dollar Strength Remains a Central Factor**
– The US Dollar Index (DXY) has maintained its upward momentum, supported by robust macroeconomic data from the United States and expectations that the Federal Reserve will continue its tightening cycle. This dynamic has contributed to the broad-based weakness seen in GBP/USD.
– Higher yields on US treasuries have further underpinned the US Dollar, attracting capital flows away from riskier assets, including the British Pound.
**2. Bank of England’s Dovish Tilt Weighs on Sterling**
– The Bank of England (BoE) has recently adopted a more dovish stance, highlighting concerns over slowing economic growth and inflation dynamics. This has fueled market speculation that the BoE may delay further interest rate hikes, putting additional downside pressure on GBP/USD.
– BoE’s cautious language contrasts with the more hawkish messaging from the Fed, resulting in a divergence that favors USD strength.
**3. Brexit-Related Worries Still Linger**
– Even as the post-Brexit transition phase recedes further into the background, trade negotiations and the Northern Ireland Protocol continue to cast a shadow over the British Pound’s outlook.
– Periodic headlines around UK-EU trade arrangements and regulatory divergence keep market participants on edge, prompting risk-off moves in Sterling when negative developments emerge.
**4. Broader Risk Sentiment Damps GBP Demand**
– Global markets face increasing risk aversion amid concerns about slower Chinese growth, geopolitical tensions, and ongoing trade disputes.
– The British Pound, considered a risk-sensitive currency, tends to suffer during these periods, particularly against the safe-haven US Dollar.
– Stock market volatility, driven by uncertainty over the global growth outlook, has also played a role in suppressing GBP/USD.
## Technical Analysis: GBP/USD at a Critical Juncture
– GBP/USD is currently testing support near the 1.3500 handle, which marks a multi-week low for the pair.
– Technical analysts view this area as a critical level, with a daily close below likely opening the doors for further downside.
– The pair has consistently failed to break above the 1.3600 and 1.3650 zone, indicating persistent selling pressure at higher levels.
– Key short-term resistance remains near 1.3550, followed by the 1.3600 round figure and then the 50-day moving average.
**Main Technical Levels to Watch:**
– **Support:** 1.3500 (psychological), 1.3470 (recent swing low), 1.3420 (key monthly support), 1.3400 (multi-month support)
– **Resistance:** 1.3550 (immediate resistance), 1.3600 (psychological), 1.3670 (50-day MA), 1.3720 (prev. breakout)
Momentum studies, such as Relative Strength Index (RSI), are drifting near oversold territory on the daily chart, but GBP/USD has yet to display convincing signs of a reversal. The immediate momentum favours sellers.
## Fundamental Outlook: What’s Next for GBP/USD?
Several macroeconomic and geopolitical factors are set to influence the currency pair’s trajectory in the coming weeks:
### US Federal Reserve: The Hawkish Bias Continues
– **FOMC Minutes & Fed Speak:** Detailed minutes from the most recent FOMC meeting reinforced the central bank’s hawkish outlook, with
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