GBP/USD Forecast: Lacks Upside Momentum amidst Brexit Woes

• GBP/USD remains under pressure amid Northern Ireland Protocol. 
• The firm US dollar continues to weigh on the Sterling while remaining at its 20-year top. 
• BoE policy meeting remains the key event for the pound today.

During the London session, the GBP/USD forecast remains bearish amid the Brexit jitters that have recently centered on the Northern Ireland Protocol (NIP). Along with Brexit, the greenback’s safe-haven status puts pressure on the Cable. 

At the time of writing, the pair is trading at 1.22376. 

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On Monday, the pair encountered new supply at the 1.2300 level, halting its small rebound from a two-year bottom near the 1.2155 level reached on the previous week’s last day.

Incoming UK macro data confirmed the UK economy’s bleak outlook and hinted that the Bank of England’s current rate rise cycle might end.

UK Prime Minister Boris Johnson is preparing to revise the NIP to change the European Union’s (EU) position. On Tuesday, the UK government is set to disclose plans for unilateral changes to NIP. The EU, on the other hand, has already warned of such steps by cutting a trade pact with Britain.

Markets will also maintain a careful eye on Brexit-related events, resulting in more downward pressure on the pound.

On the other hand, the US dollar remained around a two-decade high, supported by hopes that the Fed will tighten monetary policy more quickly to combat growing inflation.

Indeed, markets are pricing at least a 50-basis point raise by the Fed at the next two policy sessions. This, along with the current risk-off atmosphere, bolstered the safe-haven greenback.

GBP/USD forecast: key events to watch

On the UK docket, today we have BoE Monetary Policy Hearings Report. Then, across the pond, we have Fed Williams’s speech.

The risk-off mood and dismal Brexit sentiment put downward pressure on GBP/USD.

However, a lack of important events during the day may allow the Cable to recoup some of its recent losses.

GBP/USD price technical analysis: Drifting towards 1.2200

The GBP/USD price forecast remains bearish despite the recent recovery on Friday. The 4-hour chart shows bearish momentum. The price is close to 20-day SMA while below the 50, 100, and 200 SMAs.

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GBP/USD is now hitting the 1.22376 level. A fall below 1.2190 will bring the pair towards the 1.2118 support level. If the pair falls below this level again, it will challenge the next support level at 1.2081. 

On the upside, the pair can go towards the next resistance level, around 1.2299. A break over 1.2337 will pave the door for a test of the following resistance level of 1.2409. 

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