GBP/USD Price Analysis – Feb 19, 2024

Daily Price Outlook

The GBP/USD currency pair has extended its bullish trend, trading around the $1.2620 mark, buoyed by expectations of an imminent Federal Reserve rate cut in March. Speculation has intensified following comments from former Fed official James Bullard, advocating for a rate reduction to bolster economic activity. 

Despite a momentary uplift from favorable Producer Price Index (PPI) data, the US dollar has experienced a decline across four consecutive sessions, reaching around 104.20. This weakening of the US dollar, coupled with the anticipation of a Fed rate cut, has favorably impacted the GBP/USD pair.

UK Housing Data Offers Mixed Signals Amid Recession Concerns

The pair also found some support from positive UK housing data, reflecting an annual increase in domestic property prices. The UK's Rightmove House Price Index reported a slight year-on-year growth of 0.1% in February, a turnaround from the previous 0.7% decrease. 

Nonetheless, the month-on-month growth showed a contraction, highlighting a complex backdrop of economic uncertainty as the UK entered a technical recession, marked by two successive quarters of GDP contraction. 

Bank of England's Catharine L. Mann emphasized the importance of additional inflation data before determining the central bank's future actions, underscoring the prevailing uncertainty. Despite the monthly contraction and the broader context of a technical recession, the positive trajectory of UK housing prices provides a nuanced backdrop for the GBP/USD pair. 

While the upbeat housing data offers some support, the overall impact on the currency pair amidst economic uncertainties remains mixed. Despite broader economic challenges, the GBP/USD pair finds support from a weakening US dollar and positive UK housing data.

GBP/USD - Technical Analysis

The GBP/USD pair is currently witnessing an uptick, registering a 0.12% increase to stand at 1.26132. This movement signifies a positive sentiment among traders, buoyed by the recent economic indicators and market dynamics. The pair's pivot point is located at 1.2529, with immediate resistance observed at 1.2613. Further resistance levels are mapped out at 1.2686 and 1.2764, indicating potential hurdles the pair might face in its upward trajectory. Conversely, support levels are established at 1.2454, 1.2368, and 1.2285, serving as crucial markers for potential downturns.

Technical indicators provide a deeper insight into the pair's market momentum. The Relative Strength Index (RSI) stands at 55, suggesting a moderate buying interest among investors. The Moving Average Convergence Divergence (MACD) shows a value of 0.00060 with a signal line at 0.00007, pointing towards a potential upward momentum as the MACD line crosses above the signal line. Additionally, the 50-Day Exponential Moving Average (EMA) at 1.2597 further bolsters the bullish outlook, indicating the pair's strength above this level.

A notable chart pattern is the downward trendline, poised to offer resistance near the $1.2630 level, highlighting a pivotal moment for the GBP/USD pair.

The overall trend for the GBP/USD appears cautiously optimistic with a suggested buy limit at 1.26098. Setting a take profit at 1.26599 and a stop loss at 1.25830 could capitalize on the current market sentiment, offering a strategic approach for traders navigating the forex landscape.