GBP/USD Faces Bearish Pressure Amid Mixed Concerns

20 jun 2023

GBP/USD continues to exhibit a defensive stance in the vicinity of 1.2780, struggling to provide valid justification for the hawkish concerns surrounding the Bank of England (BoE) as the eagerly awaited UK inflation data looms on the horizon. The lingering doubts regarding the Federal Reserve (Fed) only serve to further provoke bearish sentiments among Pound Sterling traders, hindering any potential for a continuation of the previous day's reversal from its lofty heights not seen since April 2022.

Presently, the near-term technical outlook for GBP/USD appears to be mired in overbought territory, with the Relative Strength Index (RSI) indicator on the four-hour chart lingering marginally above the 70 mark. This suggests a potential reversal in the making.

As the UK's Office for National Statistics prepares to release May's inflation figures on Wednesday, preceding the Bank of England's monetary policy announcements on Thursday, the valuation of the US dollar could exert a considerable influence on the trajectory of GBP/USD in the days to come. With this in mind, we entertain the notion of a bearish impulse, anticipating a retracement towards the previous support region encapsulating the 38.2% Fibonacci level.

Although the current analysis reflects an ongoing uptrend within a bullish channel, we anticipate a temporary pullback before the emergence of a new long setup, reinforcing our bearish bias.