Technical Analysis – GBPUSD relies on support levels as bears stay in play
GBPUSD exposed to more declines in the short-term
Outlook to stay neutral as long as the price holds above 1.2485
BoE policy announcement due at 12:00 GMT
GBPUSD came under renewed downside pressure on the first trading day of February, feeling the blues from Powell’s hawkish rate message.
The pair is currently testing the short-term support trendline from December’s lows at 1.2647, but the technical indicators cannot guarantee a rebound in the coming sessions. The RSI has slid below its 50 neutral mark, the stochastic oscillator is drifting southwards, and the MACD remains negatively charged below its red signal line.
Moreover, the pair could not successfully close above the 20-day simple moving average (SMA), nor it could reach the resistance trendline from July 2023 at 1.2760, increasing the risk for a bearish breakout ahead of the Bank of England’s rate announcement.
Despite the bearish vibes in the market, there are a couple of key support levels, which could still cool selling forces. The area of 1.2560-1.2600 could come first into view ahead of the crucial ascending trendline at 1.2485, which connects the September 2022 record low and the October 2023 trough. A decisive close below the latter would shift the outlook from neutral to bearish, likely intensifying the decline towards the 1.2370 bar.
In the event of an upside reversal, the bulls might attempt to push above the 20-day SMA at 1.2700 and beyond the resistance trendline from July 2023 at 1.2760. If they succeed, the price could increase straight up to December’s high of 1.2826, while higher, it could retest the 1.2870-1.2900 region before gearing up to meet the ascending line from November currently around 1.2970.
Summing up, downside pressures could persist in GBPUSD, but any potential declines may not upset traders unless the pair crosses below 1.2485.
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
