GBP/USD lifts from 1.3000 on a falling US dollar as bull’s eye 1.3160

• The British pound is gaining in the New York session, up some 0.54%.
• GBP/USD gains were attributed to falling US Treasury yields which undermined the greenback.
• Scotiabank and BBBH expect further downside on the GBP/USD.
• GBP/USD Price Forecast: The pair remains downward biased unless GBP bulls lift the price above 1.3160.

The British pound recovers from weekly lows near the 1.3000 figure amidst a weaker US dollar, spurred by falling US Treasury yields and upbeat market sentiment around the financial markets. At 1.3067, the GBP/USD portrays the aforementioned, poised for a re-test of the 1.3100 mark.

US equities remain trading in the green, except for the tech-heavy Nasdaq, which is losing 0.79%, blamed on a worse than expected Netflix earnings report. In the FX complex, risk-sensitive currencies remain in the driver’s seat, led by the high beta currencies and the GBP, contrarily to the greenback, which is losing 0.63%, as portrayed by the US Dollar Index, at 100.352, down from YTD high at 101.035.

Scotiabank and Brown Brothers Harriman (BBH) expect the pound to fall further

Meanwhile, the GBP/USD took advantage of a weaker greenback, pushing towards April’s 18 daily highs at 1.3064, in which case, the pair would resume its upward trajectory towards 1.3100 in what appears to be a corrective rally. Analysts at Scotiabank wrote on a note that they expect GBP/USD to fall over the coming months, as the Bank of England is set not to deliver rate hike expectations.

Furthermore, they added that “the IMF noted yesterday in its outlook review that the UK will see the highest rate of inflation this year among G7 countries, and it revised its GDP growth projections for the UK by roughly 1ppt in each of 2022 and 2023 amid the cost-of-living crisis.”

Also read: GBP/USD to tumble under the 1.30 level over the next few months – Scotiabank

In tone with what Scotiabank analysts expressed, analysts at Brown Brothers Harriman (BBH) wrote on a note that “Sterling is seeing a bounce after support near 1.30 held. Here too, we remain negative and look for an eventual test last week’s new cycle low 1.2975. Break below would set up a test of the November 2020 low near 1.2855 and then possibly the September 2020 low near 1.2675.”

GBP/USD Price Forecast: Technical outlook

The GBP/USD remains in a downtrend. If the GBP/USD is about to shift neutral, it would need to reclaim December’s 31 cycle high at 1.3160. Unless GBP bulls push prices through the latter, Wednesday’s rally would be seen as an opportunity for GBP/USD bears to open fresh bets at a better level.

With that said, the GBP/USD first support would be the 1.3000 figure. A breach of the latter would expose April 19 daily low at 1.2980. Once cleared, it would open the door for further tests downwards. First, the YTD low at 1.2971, followed by November 2020 low near 1.2855.