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GBP/USD Forecast: Retains Its Bearish Stance In The Short-Term

Valeria Bednarik - Chief Analyst at FXStreet

GBP/USD Current Price: 1.3016

  • The Bank of England left its monetary policy unchanged as expected.
  • UK Q3 GDP and Commons voting on the Brexit bill this Friday.
  • GBP/USD pierced 1.3000, retains its bearish stance in the short-term.

The GBP/USD slump continued this Thursday, with the pair bottoming at 1.2989, a two-week low, to later settle around 1.3030. The Sterling came under selling pressure at the beginning of the European session, following the release of UK November Retail Sales, down in the month by 0.6%, and up by just 1.0% when compared to a year earlier. Then came the Bank of England, which kept the monetary policy unchanged. Policymakers voted as expected, with two MPC’s members favoring a rate cut, as it happened in the previous month. However, they said that it was too early to assets the impact of Johnson’s victory and how would Brexit play afterward. Governor Carney will preside one more meeting before stepping down on January 31, and would probably leave the decision to take action to his successor.

This Friday, UK PM Johnson will submit his Withdrawal Agreement Bill to the House of Commons and is expected to pass comfortably after Johnson’s victory last week. Also, the UK will release Q3 Gross Domestic Product, with the annualized reading expected at 2.1% as previously estimated.

GBP/USD Short-Term Technical Outlook

The GBP/USD pair retains its bearish stance after falling for a fifth consecutive day. The 4-hour chart shows that it bounced from its 200 SMA, the first time around the indicator this month, but settled below a firmly bearish 20 SMA, also below its 100 SMA. Technical indicators in the mentioned chart hold well below their midlines, with the Momentum having recovered just modestly but the RSI maintaining its bearish slope, keeping the risk skewed to the downside.

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