Technical Analysis

GBP/USD Price Analysis – June 24, 2024

By LonghornFX Technical Analysis
Jun 24, 20243 min

Daily Price Outlook

During the European trading session, the GBP/USD pair has maintained its upward trend and remain bullish around 1.2664, hitting the intra-day high of 1.2672 level. However, the reasons behind this upward movement is the temporary pause in the US Dollar's strength, as indicated by the US Dollar Index (DXY).

Despite initial gains, the DXY struggled to break above 106.00, which eased upward pressure on the Greenback against its major peers, including the Pound Sterling. On the flip side, market sentiment towards the Pound Sterling has been bolstered by upbeat data from the UK, including a rebound in economic activities despite uncertainties surrounding the UK elections.

Pound Sterling's Strength Amidst BoE Interest Rate Expectations

On the GBP front, the Pound Sterling has showed strength against its major counterparts, excluding the Euro, despite market expectations of the Bank of England (BoE) moving towards interest rate cuts starting from its August meeting.

However, the BoE's cautious stance on interest rates, described as "finely balanced," has led investors to anticipate a potential easing cycle to support economic growth amid global uncertainties.

While the prospect of lower interest rates typically weakens a currency, the Pound Sterling has managed to hold ground due to the BoE's measured approach and the return of headline inflation to the 2% target.

Meanwhile, Governor Andrew Bailey's acknowledgment of this target stability has provided additional support for the Pound, mitigating some of the downward pressure expected from future rate cuts.

Bearish US Dollar and Its Impact on GBP/USD Pair

On the US front, the broad-based US Dollar has experienced bearish sentiment despite initial positive indicators such as the unexpectedly strong PMI data and a brief period of strengthening against other currencies.

Market participants shifted their focus to the Federal Reserve's dovish signals, particularly amidst expectations of potential rate cuts as early as September. This shift in sentiment has placed downward pressure on the US Dollar, contributing to the GBP/USD pair's recent upward movement.

Investor anticipation of multiple rate cuts in 2024, contrary to the Federal Reserve's projections, has driven down US Treasury bond yields and supported alternative assets like gold. This environment of easing monetary policy expectations has weighed on the Greenback and contributed to the GBP/USD pair gains.

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

GBP/USD - Technical Analysis

GBP/USD is trading at $1.26571, reflecting a modest increase of 0.01%. The pivot point is positioned at $1.26496, serving as a crucial level for future price movements. Immediate resistance levels are observed at $1.26672, $1.26812, and $1.26947.

These levels suggest potential upward targets, indicating a bullish sentiment if the price maintains above the pivot point.

On the downside, immediate support is found at $1.26216, with further support at $1.26044 and $1.25842. These levels are critical in preventing a sharp decline, providing traders with potential entry points for long positions.

The Relative Strength Index (RSI) is currently at 48, indicating a neutral market sentiment. The 50-day Exponential Moving Average (EMA) stands at $1.26834, suggesting that the current price is slightly below this average, which may act as a resistance level in the short term.

Overall, the technical indicators suggest a cautious bullish outlook. Traders should consider a buy position above $1.26495, aiming for a take profit at $1.26814. A stop loss at $1.26219 is recommended to mitigate potential losses.

Conclusion: The GBP/USD pair shows a slightly bullish trend above the pivot point of $1.26496.

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