GBP/USD declines following a surge in UK inflation, raising prospects of a less accommodative Bank of England.
Technicals indicate bearish momentum with the pair now targeting further support levels, including the May low of 1.2445.
RSI trends toward oversold territory, suggesting continued downward pressure in the near term.
The Pound Sterling lost ground versus the US Dollar on Wednesday following a hot UK inflation report, which increased the chances that the Bank of England (BoE) would pause its easing cycle. The GBP/USD trades at 1.2643, down 0.30% after hitting a high of 1.2714.
GBP/USD Price Forecast: Technical outlook
After diving below the 200-day Simple Moving Average (SMA), the GBP/USD turned bearish, carving successive series of lower highs and lower lows and clearing intermediate support at 1.2664, the August 8 daily low. If sellers push the exchange rate below 1.2600, this will exacerbate a drop toward the May 9 swing low of 1.2445, ahead of the yearly low of 1.2299.
Conversely, if GBP/USD rises above 1.2700, this could pave the way for challenging the 200-day SMA at 1.2818. Once cleared, the next stop would be November’s 6 low turned resistance at 1.2833, ahead of 1.2850 and 1.2900.
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