GBP/USD showed gains for two consecutive days last week but closed in negative territory. As geopolitical tensions escalate, investors shy away from risk-sensitive assets, leading to a cautious market mood. The pair’s near-term technical outlook does not indicate a strong recovery momentum, hovering just above 1.2750 in the European session on Monday.
Analysis and Breakdown:
Over the weekend, reports of heightened alertness in Israel due to expected threats from Iran added to the tension. Israel Defense Forces intercepted potential threats crossing from Lebanon into northern Israel, contributing to the market’s cautious stance. This uncertainty prompts investors to favor safe-haven assets like the US Dollar, hindering GBP/USD’s recovery.
Looking ahead, the UK’s Office for National Statistics will release employment data on Tuesday, while market participants eagerly await the Consumer Price Index (CPI) data from both the UK and the US on Wednesday. These upcoming inflation figures could influence GBP/USD’s direction in the near term.
In the technical analysis, the Relative Strength Index (RSI) indicator remains flat near 50 on the 4-hour chart, indicating a lack of bullish momentum. Resistance is seen around 1.2800-1.2810, with support at 1.2750. Further losses may occur if the support fails, targeting levels around 1.2700 and 1.2660.
Overall, the geopolitical tensions and upcoming economic data releases are likely to keep GBP/USD under pressure. Investors should monitor developments closely to make informed decisions regarding their finances and trading strategies.