Daily Price Outlook
Following a new six-week low of 1.2332 hit in the early European trading hours, the GBP/USD pair has started to bounce back. However, after a rather hesitant recovery, it’s expected that the pair might continue its downward trajectory as investors are favoring a risk-off mood due to looming US debt ceiling escalations.
Having recently breached a multiple-day low, GBP/USD is licking its wounds at a 1.5-month trough, approximating 1.2350 as Thursday’s early trading begins.
In the early Asian session, the GBP/USD pair showed weakness above the critical support level of 1.2360. The pair struggles to shield its downside, hampered by the robust strength of the US Dollar Index and the much-anticipated elevation of the US debt ceiling by the White House.
Despite an initial bump seen in UK inflation data, the GBP/USD pair has made a U-turn and forfeited most of its daily advances. According to the near-term technical outlook, as long as the pair remains below a vital resistance level around 1.2450, bears are likely to remain in control.
In the first half of the European session, the GBP/USD pair pulls back to the bottom of its daily trading range after an intraday bullish spike near 1.2470 lost momentum. The pair is currently hovering around 1.2420 and seems vulnerable to extend its recent downward slide, a trend observable over the past fortnight or so.
GBP/USD Price Chart – Source: Tradingview
GBP/USD – Technical Outlook
The GBP/USD currency pair is currently trading with a bearish bias as the US dollar strengthens due to solid fundamentals emerging from the US economy. The pair is currently hovering around the 1.2345 level.
On the four-hour timeframe, GBP/USD has formed three consecutive black candles followed by a bearish engulfing candle, indicating dominance by the British base in the market.
The pair has also breached the key support level at 1.2390, and a close below this level suggests a bearish sentiment. The RSI and MACD indicators are both in the oversold zone, signaling a potential bullish correction.
The price is currently in the middle of the upper range at 1.2395 and the lower range at 1.2300. It is advisable to wait for a retracement in the market and consider taking a sell position below 1.2395 or around 1.2375, with a target around 1.2300 or 1.2275.
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