We are halfway through 2024, and the volatility of GBP/USD has been surprisingly low. What can we expect in the second half of the year? Let’s explore the GBP/USD outlook for H2 2024.
Historically, the annual fluctuation range of GBP/USD averages about 1600 pips, with a maximum of 6560 pips and a minimum of 1076 pips. As of May 10, 2024, the year-to-date fluctuation is only 595 pips, indicating potential for further movement.
If this trend continues, we could see an additional movement of 400 to 1000 pips either up or down. Depending on whether the yearly high or low has been established, the GBP might rise to around 1.33 or drop to about 1.19. The Bank of England (BoE) recently announced a decision to maintain interest rates at 5.25%, citing concerns about inflation exceeding the 2% target.
With the UK facing challenges such as high employment, job vacancies, strikes, and potential bankruptcies in certain counties, the GBP is likely to weaken compared to the USD. The upcoming general election in the UK adds to the political uncertainty, further impacting the economy.
In the short term, technical analysis shows that the GBP/USD pair has encountered resistance at the 60-day moving average and found support at the 20-day moving average. The currency pair continues to experience range-bound movement with no immediate downside risk.
In conclusion, the UK economy’s challenges and potential interest rate cuts by the Bank of England compared to the US Federal Reserve are likely to push GBP/USD towards a lower target in the second half of 2024.