GBP/USD Technical Analysis: The Bears Prepare to Take Control

(MENAFN- Daily Forex) The British Pound could continue to rise against the US Dollar as long as investors remain optimistic as the bear market rally broadens. Analysts are warning that the recent surge in sentiment may soon be over. In general, the price of the gbp/usd currency pair has risen around 4.6% over the past two weeks, with gains towards the resistance level of 1.2030, before stabilizing around the level of 1.1850 at time of writing. The currency pair’s gains came as markets bet that the US Federal Reserve would end the US interest rate hike cycle in early 2023, amid signs that US inflation was now peaking. .

Commenting on the performance, George Vessey, analyst at Western Union Business Solutions, said: “GBP/USD is still 9% below its 2-year average, but has risen more than 6% in the past 10 trading days. stock market, buoyed by weak demand for the U.S. dollar on hopes that the U.S. Federal Reserve will slow the rate hike cycle.

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The pound enters trading this week, buoyed by the continued rally in global stock markets and positive investor response to last Thursday’s autumn statement, as the UK government pledged to ensure that financial conditions of the country will remain stable over the next few years. For the financial markets, it is better to be bored. As a result, Thaneem Islam, head of forex analysis at Equals Money, says: “In the short term, there seems to be a sense of relief after the recent carnage we have witnessed in UK assets. As long as risk appetite is there, the pound should be supported. “Despite the bleak economic outlook in Britain, some other macro factors suggest the pound may continue to recover, albeit slowly,” the analyst added.

Western Union analysts say support for GBP/USD can also be found in improving terms of trade in the UK versus the US, improving global risk appetite which underpins risk-sensitive currencies such as the pound sterling, and the fact that UK markets are expected to be above US rates by early 2024. Looking at the GBP/USD technical setup, GBP/USD is still below its main 200-day moving average – located around $1.22 – indicating that the long-term downtrend is still valid for now.

However, Sean Osborne, Senior Forex Analyst at Scotiabank, said the short-term GBP/USD technical indicators are neutral/bullish and this could lead to more upside over the next few days. The analyst added, “Cable price patterns look generally positive on the short-term charts as the market consolidates the Pound’s recent surge resisting the main downtrend (now 1.1468 on the daily chart) . However, the Pound needs to push further – above 1.20 – for the gains to develop in the short term and create a range of 1.20 to 1.25.

  • According to the performance on the daily chart, the price of the GBP/USD currency pair is in a neutral position with a bullish bias.

  • It lacks the momentum to complete the recent rally higher, and it looks like the currency pair is in a hold mode until markets react to the minutes of the US Federal Reserve meeting.

  • Tightening the tone involves activating profit taking on sell trades that may be exposed to the currency pair, which may collide with the 1.1740 and 1.1630 support levels.

  • The last level confirms a break in the general trend.

On the other hand, retesting the psychological resistance at 1.2000 will be important for the bulls to regain control. The currency pair is not expecting major and influential economic data, but there will be statements from US Federal Reserve officials.

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