GBP/USD forecast: 2024 low at siege amid risk aversion

• UK manufacturing output contracted by more than anticipated in December.
• Market players buy the Greenback as mounting uncertainty weighs.
• GBP/USD pressures fresh multi-month lows with a firmly bearish stance.

The US Dollar (USD) resumed its advance after the New Year holiday, challenging multi-month highs against European rivals in the American session. The GBP/USD pair traded as low as 1.2351, bouncing just modestly from the level as the dismal mood prevails.

The Pound Sterling (GBP) fell following the release of the December United Kingdom (UK) Manufacturing Purchasing Managers' Index (PMI), as the final version resulted at 47, below the previous estimate of 47.3, also missing expectations of a similar reading.

The faster-than-anticipated contraction in manufacturing output was attributed to "destocking at clients, subdued market confidence and operational restructuring in response to forthcoming legislative changes hit output and demand and reinforced ongoing efforts to achieve cost efficiencies," according to the S&P Global report.

Meanwhile, financial markets are in risk-averse mode. Concerns about central banks' hawkish shifts coupled with geopolitical tensions push speculative interest into safety.

The UK will publish minor money-related data on Friday, which usually has no relevant impact on GBP. The United States (US) will release the December ISM Manufacturing PMI, foreseen stable at 48.4. A  better-than-anticipated reading should provide additional support to the USD.

GBP/USD Technical Outlook

The GBP/USD pair trades at around 1.2370 without signs of changing course in the near term. The pair has fallen for a third consecutive trading day, and once the aforementioned intraday low gives up, the 2024 low at 1.2298 comes as the next relevant support level and a potential bearish target. A break below the latter exposes the 1.2200 threshold.

Potential GBP/USD gains would likely be corrective, with the initial resistance coming at around the 1.2400 area. December 20 low at 1.2474, is the next level to watch.