• The pound rose after bullish remarks from BoE policymakers.
  • Would-be homebuyers in the UK were discouraged by the recent interest rate increases.
  • Investors are awaiting UK GDP figures.

Today’s GBP/USD outlook is bearish. The pound fell on Friday as investors digested data showing a deteriorating housing market. This came after a bullish session on Thursday following hawkish remarks from the Bank of England policymakers.

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According to a survey released Thursday, would-be homebuyers were discouraged by the recent interest rate increases, which led to the most significant price drops in Britain’s housing market since 2009.

The BoE predicted last week that the UK economy will probably enter a recession in early 2023 and not come out until early 2024, which would be a shorter contraction period than in its initial set of projections.

Other housing market indicators have also recently demonstrated a loss of momentum following the rise in demand seen during the coronavirus outbreak.

Traders noted statements made by several Bank of England officials, including Jonathan Haskel, who stated that he still believed “forceful action” would be necessary if inflation persisted. 

To lower sky-high inflation without sparking a severe recession, the BoE has raised interest rates ten times since December 2021, with the most recent increase occurring a week ago.

The UK’s Office for National Statistics will release its estimated GDP numbers for December 2022 on Friday.

David Stritch, a currency analyst at broker CaxtonFX, wrote in a note that “with such hype and with GBP in such a standstill with USD and EUR, whatever the figure prints will have a substantial effect on Sterling which is hanging to 1.20 against the dollar.”

GBP/USD key events today

Investors will focus on gross domestic product data from the UK that will show the state of the economy amid rising interest rates.

GBP/USD technical outlook: Bears approach the pivotal 30-SMA support

GBP/USD technical outlook

The 4-hour chart shows GBP/USD trading near the 30-SMA after breaking above it and pulling back. The bulls were strong enough to break above the 30-SMA but failed to go above the 1.2200 key level. At this point, the bears came in for a pullback.

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However, the RSI shows strong bearish momentum as it has crossed below the 50-level. This could see the price break below the 30-SMA and the 1.2050 support level. The bullish move will only continue if the SMA holds as support.

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Source: https://www.forexcrunch.com/gbp-usd-outlook-uk-housing-market-hit-by-rising-interest-rates/