GBPUSD nears 2024 lows: is a bounce a buying opportunity?

With GBPUSD approaching its 2024 low of $1.2298, it might be tempting to buy the British Pound against the USD. However, buying solely because it's oversold is not a good reason to turn bullish.

Today's data, including ADP, job openings, and jobless claims, mostly exceeded expectations. While the ADP report slightly disappointed, the deviation was minimal. As a result, Friday's non-farm payrolls are also likely to remain strong, lifting US government bond yields higher. The yield spread between US bonds and those from other regions seems set to widen further, which will continue to pressure GBPUSD.

While a short-term bounce is possible, if the price rises above $1.2415, traders are likely to view this as an opportunity to short sell as long as the price stays below $1.2511. The targets remain the 2024 low of $1.2298, followed by $1.2081, which marks the October 2023 lows.

The only argument for buying the British Pound at this stage might be that it seemingly can't get worse. However, it realistically can, especially with Trump potentially returning to power in the US and likely reintroducing tariffs against key trading partners.

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