Technical Analysis

GBP/USD Price Analysis – Aug 10, 2023

By LonghornFX Technical Analysis
Aug 10, 20232 min

Daily Price Outlook

The GBP/USD currency pair continues to show sluggish trading, maintaining its consolidation around the 1.2715-20 range. Traders are exercising caution in light of the imminent US July inflation data Furthermore, news of the UK's move to limit investments in Chinese tech companies weighs on the Pound Sterling. In the meantime, the concerns about a possible British recession and the potential for increased rates in London are further dampening the performance of the Cable pair. These combined factors are fostering a cautious approach among GBP/USD traders

UK Political Moves, Economic Forecasts, and Their Impact on GBP/USD

According to the Financial Times (FT), UK Prime Minister Rishi Sunak is considering limiting investments in China's tech sector, aligning with US President Joe Biden's approach. This move comes as Sunak aims to regain political support following recent by-election setbacks.

Meanwhile, the National Institute of Economic and Social Research (NIESR) predicts British output to recover to pre-pandemic levels by Q3 2024, with a 60% chance of an election during a recession. On a positive note, NIESR expects UK inflation to exceed the Bank of England's 2.0% target for four years, potentially prompting actions to support the British Pound (GBP) by the central bank.

Therefore, this news of UK PM Sunak considering limits on Chinese tech investment, along with NIESR's prediction of British output recovery by Q3 2024 and potential election risks, could create uncertainty for GBP/USD.

Market Uncertainty Amid CPI and GDP Anticipation, US-China Tensions, and Central Bank Doubts

Market sentiment remains uncertain as traders anticipate the US Consumer Price Index (CPI) and UK's Q2 GDP results, while tensions between the US and China persist. US President Biden signed a bill limiting investments in Chinese entities, prompting concerns from China.

GBP/USD Price Chart – Source: Tradingview
GBP/USD Price Chart – Source: Tradingview

GBP/USD - Technical Analysis

The GBP/USD pair successfully breached the 1.2725 level and concluded the daily candlestick below it. This development reinforces the anticipation of a sustained bearish trend in the forthcoming trading sessions, thereby paving the way for a potential move towards 1.2825 as the next downside target.

The influence of the EMA50 indicator continues to align with the projected bearish wave. It's noteworthy that surpassing the 1.2725 level would alleviate the present downward pressure, initiating potential recovery attempts aimed at reaching the 1.2825 regions initially.

For today's trading outlook, the projected range is set between the support level of 1.2625 and the resistance level of 1.2790.



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