Daily Price Outlook
During the Asian trading hours on Wednesday, the GBP/USD pair found it challenging to cross the 200-hour Simple Moving Average (SMA).
Spot rates are currently hovering just around the mid-1.2700s, marking a decrease of less than 0.10% on the day, following substantial advancements the day before that pushed them to a new peak for the week.
Worries about a potential recession in the British economy, especially in light of the Bank of England’s (BoE) surprise 50 basis point rate increase, are hampering traders’ enthusiasm for confident bullish bets on the pound sterling.
This is impacting the GBP/USD pair, though a mild US Dollar (USD) downturn should provide temporary cushioning to the fall.
Traders may choose to remain on the sidelines until later on Wednesday when Fed Chair Jerome Powell and BoE Governor Andrew Bailey take part in a panel discussion at the ECB Forum on Central Banking in Sintra.
GBP/USD cautiously ascends around the mid-1.2700s, focusing on remarks from BoE’s Bailey and Fed Chair Powell.
Defending Tuesday’s remarkable comeback and its first daily profits in four days, the GBP/USD currency pair hovers around 1.2750 in the early hours of Wednesday morning in Asia.
Thus, the Cable pair is reflecting the typical nervousness ahead of anticipated speeches from leading central bankers at the European Central Bank (ECB) Forum in Sintra.
The previous day’s uplift in the GBP/USD pair was underpinned by the market’s optimism regarding the global economic recovery, further bolstered by China, as well as hawkish statements from Bank of England (BoE) policymaker Swati Dhingra.
GOLD Price Chart – Source: Tradingview
GBP/USD – Technical Analysis
In the currency trading scene, the GBP/USD pair has adopted a neutral stance, maintaining its position around the 1.2730 level following its previous brush with the 1.2760 resistance level.
On the shorter time frame, we observe the formation of a descending triangle pattern, with its upper boundary at 1.2760 and a triple bottom support area solidified at the 1.2690 level.
Adding a further layer of complexity to the market dynamics, the Relative Strength Index and the Moving Average Convergence Divergence indicators have been oscillating between the buying and selling zones. This signals an ongoing indecision among the market participants.
On the support front, the 50-day Exponential Moving Average is bolstering the GBP/USD pair at the 1.2720 level. Given these factors, we are eyeing potential breakout points.
A bullish breakout above 1.2760 or conversely, a bearish breakout below 1.2695 could dictate the next significant market move. If a bearish breakout occurs, the pair may venture down towards 1.2660 or even 1.2633. Alternatively, resistance levels to consider on the upside are positioned at 1.2800 and 1.2840.
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