GBP/USD Forecast: Pound Sterling closes in on key 1.2050 support

GBP/USD came under bearish pressure and declined below 1.2100.
Pound Sterling struggles to find demand as markets remain risk-averse.
Markets await Fed Chairman Powell’s speech before the Economic Club of New York.
GBP/USD turned south in the early European session and dropped below 1.2100 after spending the Asian trading hours in a tight range near 1.2150. The risk-averse market atmosphere and rising US Treasury bond yields help the US Dollar outperform its rivals on Thursday and make it difficult for the pair to shake off the bearish pressure.

The benchmark 10-year US Treasury bond yield extended its weekly rally and climbed to its highest level since 2007 near 5% on Thursday. Later in the day, Federal Reserve Chairman Jerome Powell will speak before the Economic Club of New York.

Pound Sterling price today
The table below shows the percentage change of Pound Sterling (GBP) against listed major currencies today. Pound Sterling was the weakest against the Euro.
In case Powell notes that rising bond yields could have a similar impact to an interest rate hike, the USD could weaken against its rivals and help GBP/USD stage a rebound. On the other hand, Powell could reiterate the need for one more rate increase before the end of the year and provide a boost to the USD. In case the chairman adopts a neutral tone and says that they will assess the data before deciding whether they will need to tighten the policy further, the USD’s valuation could be driven by the risk perception.

At the time of press, US stock index futures were down between 0.1% and 0.2%. If safe-haven flows dominate the action amid escalating geopolitical tensions later in the day, GBP/USD could have a hard time gaining traction.

If GBP/USD confirms 1.2100 (psychological level, static level) as resistance, additional losses toward 1.2050 (end-point of the latest downtrend) and 1.2000 (psychological level, static level) could be witnessed.

On the upside, 1.2130 (static level) aligns as immediate resistance before 1.2175 (100-period Simple Moving Average) and 1.2200 (psychological level, Fibonacci 23.6% retracement of the latest downtrend).