GBP/USD has had quite an adventurous past few trading days, and we are seeing a depressed GBP/USD back down to 1.3436 rates. This currency pair fell as low as 1.3415 this week. The decline highlights the growing selling pressure on the Pound Sterling as demand for the US dollar continues to soar. GBP/USD has since settled into a period of consolidation around the 1.3450 level, painting both bullish and bearish pictures for traders and investors.
The market is watching GBP/USD like a hawk to see how it performs. It’s important to look at some major technical indicators and trends that can impact future price action. These indicators show bullish/bearish support and resistance levels, helping traders set themselves up for success no matter the direction the market is headed.
Technical Indicators and Moving Averages
The recent extreme swing of GBP/USD has triggered a detailed look at its most important technical indicators. The currency pair’s 20-day Simple Moving Average (SMA) currently stands at 1.3457. It was the first local peak greater than the 50-, 100- and 200-day SMAs. This climb could indicate that despite the short-term bearish conviction around GBP/USD, the long-term trend is still bullish.
GBP/USD has remained above the longer-term moving averages as it trades just below the 20-day SMA. This path is merely a short-term retracement in the larger unequivocal trend up and creates second chance opportunities for the motivated bottom right when rant find their footing. The RSI (Relative Strength Index) for GBP at 52. This means that on the whole, the pair is not overbought or oversold, complicating its bearish view overall.
Support and Resistance Levels
With GBP/USD rising sharply from new lows and rallying toward key Fibonacci retracement levels, there’s a lot to unpack. The low that was 1.3045 recently climbed to a high of 1.3551. Currently, the 23.6% retracement level is at 1.3432 and represents the first support. With GBP/USD now trading in earnest above this level, a holdout above 1.3358 is critical for keeping up the momentum of buyers.
A daily close underneath this important support barrier could see the onset of more extensive corrective for GBP/USD. A retreat to the 38.2% retracement level at 1.3358 would make this line all the more crucial for buyers. Should selling pressure persist and breach this support, it could signal a shift in market sentiment, leading to further declines.
Market Sentiment and Future Projections
Either way, market sentiment is changing with a growing demand for the US dollar. This has only compounded the upward pressure on the Pound Sterling. As the GBP/USD made its weekly low around 1.3415, traders understandably viewed this reversal of fortunes with trepidation. A topside break above resistance at 1.3507 would probably solidify bullish continuation scenarios, but until that happens, doubt hangs in the air.
The ascending trend line from 1.3044 serves as a floor for the recent rally and indicates that bullish momentum could be ongoing. Traders must remain vigilant in monitoring current price action and market developments to ascertain the direction of future movements for GBP/USD.