**GBP/USD Price Forecast: Pound Slides Toward 1.34**
*By TradingNews.com Analyst Team*
The British pound has come under pressure in recent sessions as the GBP/USD currency pair edges toward the 1.3400 mark. The latest slide reflects mounting concerns over the UK’s economic outlook, central bank policy divergence, and risk aversion in global financial markets. This article provides an extensive overview of the price drivers, technical outlook, and key fundamental factors influencing the GBP/USD exchange rate as June 2024 unfolds.
**1. GBP/USD Recent Performance and Context**
The pound sterling was lashed by broad-based US dollar strength and persistent domestic uncertainties. After a relatively stable spring, the GBP/USD pair has seen a steady descent from its mid-May highs near 1.2800, reaching lows around 1.3460 in recent trade.
**Key recent developments include:**
– **Stronger US Dollar:** The greenback has found renewed support as traders recalibrated expectations for Federal Reserve rate cuts.
– **UK Economic Data Misses:** Several indicators including GDP growth and consumer confidence have underperformed.
– **Political Headwinds:** The announcement of a snap general election in the UK has added fresh volatility.
– **Geopolitical Risks:** Ongoing uncertainties in Ukraine, the Middle East, and persistent US-China tensions have favored the safe-haven US dollar.
**2. US Dollar Strength Drives The Pair Lower**
A main factor behind GBP/USD’s recent slide has been US dollar resilience. The US economy has remained broadly robust, especially compared to other advanced economies. Recent US data, including strong non-farm payrolls, healthy retail sales, and sticky inflation prints, have dampened expectations for aggressive monetary easing from the Federal Reserve.
**Dollar-specific drivers:**
– **Fed Policy Outlook:** Market participants now anticipate only one rate cut by the end of 2024, if any, down from two or three cuts priced earlier.
– **Hawkish Fed Rhetoric:** Recent remarks from Fed officials have emphasized the need for “greater confidence” in returning inflation to target.
– **Safe Haven Flows:** With geopolitical risks simmering, the dollar continues to function as the global reserve currency and primary safe haven.
**3. UK Fundamentals Weigh on Sterling**
The pound, by contrast, faces mounting headwinds from domestic data and the broader UK outlook.
**Key UK issues impacting GBP/USD:**
– **Subdued Growth:** Recent UK GDP figures showed a tepid recovery, with the growth rate trailing other G7 countries.
– **Inflation Still Above Target:** Although UK inflation has moderated, it remains above the Bank of England’s 2 percent goal, complicating policy decisions.
– **Political Uncertainty:** The upcoming general election, set for July, injects additional unpredictability into pound pricing, especially as markets assess varying fiscal stances.
– **Current Account Deficit:** The UK continues to run a large current account deficit, making the pound more vulnerable to shifts in risk appetite.
**4. Bank of England vs. Federal Reserve: Diverging Outlooks**
Central bank divergence remains a key factor for GBP/USD. The Bank of England has signaled that interest rate cuts could be on the table over the summer, contrasting with the Fed’s more cautious approach.
– **BoE Dilemma:** Although inflation lingers, weak growth provides a case for policy easing. The BoE’s recent communications suggest a split committee and data-dependent stance.
– **Fed Higher-for-Longer:** The Federal Reserve’s unwillingness to commit to imminent cuts keeps the US dollar firm and places downward pressure on GBP/USD.
**5. Short-Term Technical Analysis**
Technical traders have paid close attention to the pound’s recent breakdown.
**Key technical features as of June 2024:**
– **Support:** The 1.3400 hurdle is a crucial psychological and technical support level. A daily close below would expose 1.3300 and
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