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The pound to dirham exchange rate looks vulnerable to further losses in the week ahead as a post-January peak consolidation continues to grind lower.
GBP/AED opens the new week around 4.9998 after falling roughly half a per cent last week, extending a pullback from the late-January high at 5.0882.
Recent price action fits the profile of a consolidative drawdown rather than a sharp reversal, but the balance of risks remains skewed to the downside.
Momentum indicators suggest the market is searching for fresh direction, with the Relative Strength Index sitting at a neutral 52.
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Even so, near-term technical signals lean negative, with the pair trading below the nine-day exponential moving average at 5.0058, which is itself pointing lower.
That configuration typically indicates rallies are being sold rather than extended.
As a result, the week-ahead bias favours a test of horizontal graphical support around 4.95.
If that level gives way, attention would turn to the February downside target at the 200-day exponential moving average, currently located near 4.9023.
Seasonal patterns add weight to this view, as February has historically been a strong month for the U.S. dollar, a dynamic that tends to translate directly into dirham outperformance given the currency peg.
However, those with near-term payment needs should be mindful of potential two-way volatility midweek as markets digest key U.S. labour market data.
A softer-than-expected jobs report would likely undermine the dollar and prove a setback for the dirham, offering temporary relief for GBP/AED.
Attention then shifts to Friday’s U.S. CPI inflation release, which will be critical in shaping expectations for interest rate cuts from the Federal Reserve.
A weak inflation print would increase the probability of faster or deeper easing, weighing on the dollar and dirham, while a firm reading would reinforce the case for fewer cuts and keep downward pressure on the pound into the end of the week.
