Technical Analysis

GBP/USD Price Analysis – Dec 13, 2023

By LonghornFX Technical Analysis
Dec 13, 20234 min

Daily Price Outlook

The GBP/USD currency pair failed to stop its losing streak and remained well offered around 1.2530 level on Wednesday. The GBP/USD pair had a lot of ups and downs in the last session due to job numbers in the UK and inflation figures in the US. According to the UK Office for National Statistics, the Claimant Count Change for November increased to 16.0K from the previous figure of 8.9K but fell short of the expected 20.3K.

Additionally, the Employment Change for October decreased to 50K from the previous 54K. Therefore, the GBP/USD faced slight pressure as the UK's Claimant Count Change and Employment Change data miss expectations, indicating economic challenges.

UK Economic Indicators Signal Challenges for GBP, Eyes on GDP and BoE Decision

It is worth noting that the UK Office for National Statistics reported an increase in November's Claimant Count Change to 16.0K from the previous 8.9K, but it fell short of the expected 20.3K. Additionally, Employment Change for October dropped to 50K from 54K.

Looking ahead, investors await Wednesday's data, expecting a 0.1% decline in October's monthly Gross Domestic Product (GDP) and Industrial Production. On Thursday, the Bank of England (BoE) is anticipated to maintain interest rates at 5.25%, with a potentially hawkish tone.

These figures suggest potential economic challenges, impacting the GBP. Traders will closely watch the upcoming GDP and BoE decisions for further insights into the UK's economic health and the currency's future direction.

Anticipation of US Economic Indicators and Fed Decision Sparks GBP/USD Volatility

Furthermore, market investors are awaiting the US Producer Price Index (PPI) and the Federal Reserve's (Fed) Interest Rate Decision in the upcoming North American session. The US Dollar (USD) saw a minor dip and recovery following the release of moderate Consumer Price Index (CPI) data in the United States (US).

On Tuesday, the US Bureau of Labor Statistics reported a 0.1% monthly and 3.1% yearly increase in the US Consumer Price Index (CPI) for November, aligning with expectations. The Core CPI also rose by 0.3% monthly and 4.0% yearly, meeting projected levels.

The Federal Open Market Committee (FOMC) is anticipated to maintain its current policy stance in the December meeting. Investors will closely watch for insights from Federal Reserve (Fed) Chair Jerome Powell on potential interest rate changes in the upcoming year. This could impact the US Dollar's performance as traders assess future monetary policy directions.

Therefore, the GBP/USD pair will likely experience volatility as investors eagerly await the US PPI and Fed's Interest Rate Decision.

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

GBP/USD - Technical Analysis

The GBP/USD pair on December 13th exhibits a slight downward trend, currently positioned at 1.25513, marking a decline of 0.1%. As market participants analyze the currency's movement within the context of global economic developments, the technical outlook presents a nuanced perspective.

In the current trading landscape, the pair is navigating through crucial technical levels. The pivot point is established at $1.2458, serving as a foundation for potential directional shifts. The currency pair confronts immediate resistance at $1.2595, with further hurdles at $1.2682 and $1.2813. On the downside, immediate support looms at $1.2370, followed by stronger levels at $1.2240 and $1.2104.

The technical indicators contribute to this complex picture. The Relative Strength Index (RSI) stands at 44, indicating a bearish sentiment as it remains below the critical 50 threshold. Meanwhile, the Moving Average Convergence Divergence (MACD) reveals a value of 0.00022, contrasting with its signal line at -0.00101, suggesting a potential shift in momentum.

Notably, the 50-Day Exponential Moving Average (EMA) is currently at $1.2556, with the GBP/USD trading just below this mark. This positioning of the EMA is acting as a significant resistance level at $1.2575. The formation of Doji and spinning top candles under this EMA level indicates a selling bias, particularly as the market awaits the outcome of the Federal Open Market Committee (FOMC) meeting.

In conclusion, the GBP/USD pair presents a bearish trend below the $1.2575 resistance level. This sentiment is underpinned by the currency's current positioning relative to key technical indicators and patterns. Traders are likely to maintain a cautious approach, particularly in light of the impending FOMC decision, which could influence short-term market dynamics.

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