Technical Analysis

GBP/USD Price Analysis – Feb 05, 2024

By LonghornFX Technical Analysis
Feb 5, 2024
Gbpusd

Daily Price Outlook 

The GBP/USD currency pair continues its declining streak, dropping further to around the 1.2610 level. However, the bearish momentum is primarily driven by the robust performance of the US dollar, reaching an eight-week high. However, this surge in dollar strength is attributed to upbeat market sentiments and the lower chance of a March rate cut by the Federal Reserve. In contrast to this, Huw Pill from the Bank of England said rate cuts might not happen soon. This was seen as a key factor that may help the GBP/USD limit its deeper losses.

US Job Market Strength and Fed's Cautious Approach Impact GBP/USD

It's worth noting that the US job market showed strength as the Nonfarm Payrolls added 353,000 jobs in January, beating expectations. Average Hourly Earnings also rose by 4.5%, exceeding the predicted 4.1%. Federal Reserve Chair Jerome Powell mentioned that the March meeting is likely too soon for rate cuts. Powell emphasized the Fed's cautious approach, stating that although confidence is increasing, they need more assurance before taking the crucial step of initiating rate cuts.

Therefore, the previously released upbeat US data and reduced likelihood of a Fed rate cut were seen as key factors that kept the US dollar higher and contributed to the losses in the GBP/USD pair.

Looking ahead, traders are keeping an eye on indicators like the ISM Services Employment Index for more insights into the US labor market.

Bank of England's Cautious Stance Favors GBP/USD Strength

Apart from this, the head of the Bank of England, Andrew Bailey, did not discuss lowering interest rates and highlighted potential price increases in the second half of the year. The bank appears more focused on controlling inflation than being concerned about a recession. Chief Economist Huw Pill mentioned that they might contemplate rate cuts later on due to uncertainty about lasting inflation. Pill emphasized the need for strong evidence before deciding to reduce policy rates.

Therefore, the cautious stance of the Bank of England, prioritizing inflation management over rate cuts, will contribute to a relative strength in the GBP/USD pair.

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

GBP/USD - Technical Analysis

The British Pound is trading cautiously against the US Dollar, with GBP/USD at $1.26099, teetering near a crucial technical juncture. The currency pair’s activity is hovering just above a significant support level at $1.25997, forming a potential double bottom pattern—a bullish technical formation that often precedes a reversal. The Doji candlestick that has emerged above this support level suggests indecision but could also signal a gathering bullish momentum if buyers begin to outweigh sellers.

The pivot point, a dynamic marker of price equilibrium, stands at $1.26982, with the pair currently operating below this threshold. Resistance levels are identified at $1.27174, $1.27478, and $1.27748, each potentially capping upward movements. Conversely, immediate support lies at the double bottom of $1.25997, with subsequent support anticipated at $1.25143 and $1.24782.

The RSI is positioned at 46, indicating that the pair is not in an extreme territory and may have room for upward movement. The 50-day EMA at $1.26982 coincides with the pivot point, reinforcing the significance of this price level as a determinant for the pair’s near-term trajectory.

In conclusion, while the GBP/USD displays potential for a bullish resurgence, this is contingent on the pair's ability to sustain above the double bottom support level. The recommended trading approach is to consider long positions above an entry price of $1.25994, targeting a profit at $1.26588, while maintaining a stop loss at $1.25619 to manage risk.

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GBP/USD

Daily Trade Ideas

GBP/USD Price Analysis and Trade Forecast: Daily Trading Signal

By LonghornFX Technical Analysis
Jan 31, 2024
Gbpusd

Daily Price Outlook 

- GBP/USD sees subtle decline, trading near pivotal $1.2647 support level.

- Key resistance and support levels identified, with RSI and MACD indicating slight bearish pressure.

- Current strategy suggests potential for a sell position, with defined risk parameters.

The British Pound (GBP/USD) exhibits modest weakness on January 31, trading down by 0.15% to $1.268. The currency pair's movement is contained, with traders and investors scrutinizing key technical levels for directional clues.

At present, GBP/USD hovers just below a crucial pivot point at $1.2647. Should the pair decide to climb, it faces immediate resistance at $1.2706. If bullish momentum gathers pace, further resistances at $1.2768 and $1.2836 will come into play. Conversely, the pair is cushioned by immediate support at $1.2579, with additional safety nets at $1.2517 and $1.2447, levels which may serve as springboards for any potential rebound.

The Relative Strength Index (RSI) sits at 44, suggesting a slight bearish bias without extreme oversold conditions. The MACD presents an intriguing picture, with its value (-0.0002) just below the signal (-0.0007), indicating that the market is not firmly committed to a downward trajectory. The 50-day Exponential Moving Average (EMA) at $1.2690 is in close proximity to the current price, highlighting its relevance as a dynamic level of interest.

Taking into account the current technical landscape, GBP/USD's trend could be interpreted as cautiously bearish. A sell trade might be considered below $1.26964, targeting a moderate take-profit at $1.26562, while a stop-loss order could be prudently placed at $1.27308 to manage risk.

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

GBP/USD - Trade Ideas

Entry Price – Sell Below 1.26964

Take Profit – 1.26562

Stop Loss – 1.27308

Risk to Reward – 1: 1.17

Profit & Loss Per Standard Lot = +$402/ -$344

Profit & Loss Per Mini Lot = +$40/ -$34

GBP/USD

Technical Analysis

GBP/USD Price Analysis – Jan 31, 2024

By LonghornFX Technical Analysis
Jan 31, 2024
Gbpusd

Daily Price Outlook 

The GBP/USD currency pair extended its previous two-day losing streak, dropping near 1.2675 during the early European session. However, the downward trend is attributed to the bullish US dollar, driven by a risk-off market sentiment. Notably, US President Joe Biden has indicated a tiered approach in response to a specific situation following a deadly drone attack on US troops near the Jordan-Syria border. This has put downward pressure on market sentiment and boosted the safe-haven assets including US dollar.

Besides this, the US dollar also gained support from the JOLTS report published on Tuesday, indicating a strong labor market that may deter the Federal Reserve (Fed) from cutting interest rates in the first quarter. On the other hand, the Bank of England's commitment to a prolonged restrictive monetary policy to curb inflation could weigh on the GBP/USD pair.

US Dollar Resilience Amidst Falling Treasury Yields and Geopolitical Tensions: Factors Driving its Strength and Impact on GBP/USD

Despite falling US Treasury yields, the broad-based US Dollar managed to stop its declines and regained some positive traction near 103.60 level. However, the risk-off sentiment, driven by concerns such as the deadly drone attack, was seen as one of the key factors boosting the US Dollar. President Biden's response to a drone attack near the Jordan-Syria border adds uncertainty in the market.

In the meantime, the recent JOLTS report signaled a strong job market, reducing the chances of Fed rate cuts, supporting the Dollar, and pressuring GBP/USD. Additionally, improved Consumer Confidence and an upgraded US growth forecast by the International Monetary Fund also contribute to dollar strength against the Pound. Notably, the FOMC is expected to maintain a 5.5% interest rate, with a 43% chance of a March rate cut.

BoE's Cautious Monetary Stance: Potential Support for GBP/USD

On the other hand, the Bank of England (BoE) is likely to keep interest rates unchanged in its upcoming Thursday meeting, making it the fourth time in a row. BoE Governor Andrew Bailey hinted in December that there's more work to be done, and he expects inflation to reach the 2.0% target only by 2025.

Hence, the BoE is cautious about inflation and plans to stick to this approach for a while, which could strengthen the Pound (GBP) and prevent significant losses for the GBP/USD pair. Therefore, the BoE's expected decision to maintain interest rates and emphasize a cautious monetary policy to address inflation could potentially strengthen the Pound (GBP) and limit losses for the GBP/USD pair.

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

GBP/USD - Technical Analysis

The British Pound (GBP/USD) exhibits modest weakness on January 31, trading down by 0.15% to $1.268. The currency pair's movement is contained, with traders and investors scrutinizing key technical levels for directional clues.

At present, GBP/USD hovers just below a crucial pivot point at $1.2647. Should the pair decide to climb, it faces immediate resistance at $1.2706. If bullish momentum gathers pace, further resistances at $1.2768 and $1.2836 will come into play. Conversely, the pair is cushioned by immediate support at $1.2579, with additional safety nets at $1.2517 and $1.2447, levels which may serve as springboards for any potential rebound.

The Relative Strength Index (RSI) sits at 44, suggesting a slight bearish bias without extreme oversold conditions. The MACD presents an intriguing picture, with its value (-0.0002) just below the signal (-0.0007), indicating that the market is not firmly committed to a downward trajectory. The 50-day Exponential Moving Average (EMA) at $1.2690 is in close proximity to the current price, highlighting its relevance as a dynamic level of interest.

Taking into account the current technical landscape, GBP/USD's trend could be interpreted as cautiously bearish. A sell trade might be considered below $1.26964, targeting a moderate take-profit at $1.26562, while a stop-loss order could be prudently placed at $1.27308 to manage risk.

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Daily Trade Ideas

GBP/USD Price Analysis and Trade Forecast: Daily Trading Signal

By LonghornFX Technical Analysis
Jan 29, 2024
Gbpusd

Daily Price Outlook 

- GBP/USD at 1.27034, showing a slight downtrend; pivot at 1.2644.

- Resistance levels at 1.2706, 1.2768, 1.2835; support at 1.2585, 1.2516, 1.2449.

- RSI at 47, MACD slightly bearish, 50-day EMA at 1.2711; market trend neutral to bearish.

The British Pound (GBP) against the US Dollar (USD) demonstrates a subtle yet intricate market movement. As of January 29, the GBP/USD pair trades at 1.27034, reflecting a marginal decline of 0.01%. Analyzing the 4-hour chart, several key levels emerge, shaping the currency pair's immediate technical outlook.

The pivot point is found at 1.2644, providing a critical juncture for market direction. Above this level, the pair encounters immediate resistance at 1.2706, followed by further resistance levels at 1.2768 and 1.2835. These points could cap any bullish attempts. In contrast, immediate support lies at 1.2585, with subsequent support levels at 1.2516 and 1.2449, potentially cushioning any downward movements.

The Relative Strength Index (RSI) stands at 47, suggesting a neutral market momentum. The Moving Average Convergence Divergence (MACD) shows a value of -0.00027, indicating a slight bearish bias as it hovers just below the signal line. The 50-day Exponential Moving Average (EMA) at 1.2711 closely aligns with the current price, offering a near-term reference point for trend direction.

In conclusion, the GBP/USD pair exhibits a neutral to slightly bearish trend in the short term. For traders looking at entry opportunities, a buy position might be considered above 1.26957, targeting a take-profit level at 1.27335, with a stop loss at 1.26704. This cautious approach reflects the pair's current stability, poised between key technical levels.

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

GBP/USD - Trade Ideas

Entry Price – Buy Above 1.26957

Take Profit – 1.27335

Stop Loss – 1.26704

Risk to Reward – 1: 1.4

Profit & Loss Per Standard Lot = +$378/ -$253

Profit & Loss Per Mini Lot = +$37/ -$25

GBP/USD

Technical Analysis

GBP/USD Price Analysis – Jan 29, 2024

By LonghornFX Technical Analysis
Jan 29, 2024
Gbpusd

Daily Price Outlook 

Despite the decline in the UK public's inflation expectations and a bullish US dollar, the GBP/USD currency pair maintained its upward stance and remained well bid around the 1.2708 level. However, the reason can be linked to the reduced bets for an early BoE rate cut, which underpins the GBP and lends some support to the pair. In the meantime, traders seem hesitant to place any strong positions as they prefer to wait for more cues about the Federal Reserve (Fed) interest rates policy. Therefore, the investor's focus will be on the outcome of the highly-anticipated two-day FOMC monetary policy meeting starting on Tuesday.

FOMC Meeting and US Economic Indicators: Impact on Monetary Policy and Currency Markets

It's important to highlight that the focus is on the upcoming two-day FOMC monetary policy meeting starting on Tuesday, with uncertainty surrounding the timing of the first interest rate cut. It should be noted that the recent data, released on Friday, indicates a modest rise in US inflation for December. This reinforces expectations that the Federal Reserve might cut rates by mid-2024. However, strong growth in Personal Incomes and positive Q4 GDP suggest the economy is still doing well. This raises doubts about the Federal Reserve's potential for aggressive policy easing, supporting the US Dollar and likely putting a cap on the GBP/USD pair.

Therefore, the news suggests that doubts about aggressive policy easing by the Federal Reserve support the US Dollar, which could cap the GBP/USD pair.

BoE Policy Outlook and UK Inflation Expectations Impact on GBP/USD

Moreover, the increasing expectation that a slight improvement in the UK's sluggish economy might delay the Bank of England's (BoE) move to ease policies. This support for the British Pound (GBP) could continue backing the GBP/USD pair. In other news, a survey by US bank Citi and polling firm YouGov revealed that UK public expectations for inflation in the coming year dipped. From 4.2% in October, it fell to 3.9% in November and further to 3.5% in December. Long-term inflation expectations also declined to 3.4%. Surprisingly, this news hasn't significantly impacted GBP/USD, which remains steady at around 1.2700.

Therefore, the expectation of a delayed Bank of England policy easing, supporting the British Pound (GBP), could continue backing the GBP/USD pair. Despite falling UK inflation expectations, GBP/USD remains steady around 1.2700, suggesting limited immediate impact.

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

GBP/USD - Technical Analysis

The British Pound (GBP) against the US Dollar (USD) demonstrates a subtle yet intricate market movement. As of January 29, the GBP/USD pair trades at 1.27034, reflecting a marginal decline of 0.01%. Analyzing the 4-hour chart, several key levels emerge, shaping the currency pair's immediate technical outlook.

The Relative Strength Index (RSI) stands at 47, suggesting a neutral market momentum. The Moving Average Convergence Divergence (MACD) shows a value of -0.00027, indicating a slight bearish bias as it hovers just below the signal line. The 50-day Exponential Moving Average (EMA) at 1.2711 closely aligns with the current price, offering a near-term reference point for trend direction.

In conclusion, the GBP/USD pair exhibits a neutral to slightly bearish trend in the short term. For traders looking at entry opportunities, a buy position might be considered above 1.26957, targeting a take-profit level at 1.27335, with a stop loss at 1.26704. This cautious approach reflects the pair's current stability, poised between key technical levels.

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Technical Analysis

GBP/USD Price Analysis – Jan 24, 2024

By LonghornFX Technical Analysis
Jan 24, 2024
Gbpusd

Daily Price Outlook 

Despite the bullish US dollar and expectations that the Bank of England (BoE) will begin cutting rates as early as May, the GBP/USD pair has maintained its upward stance and remained well bid around the $1.2715 level. However, the reason for its upward trend can be linked to the upcoming release of January's UK advanced Manufacturing and Services PMI. On the other side, the anticipation of Bank of England rate cuts, starting in May, with a projected decrease to 4.25% from the current 5.25%, weighs on the GBP/USD pair.

Investors are also awaiting the US Gross Domestic Product (GDP) for Q4 on Thursday and the Core Personal Consumption Expenditures Price Index (Core PCE) on Friday. This data is adding to the cautious sentiment among investors, influencing their decision-making regarding strong positions.

BoE Rate Cut Speculation and Economic Data Concerns Impact GBP/USD Pair

It's worth noting that investors are betting on the Bank of England (BoE) cutting interest rates, starting as early as May. They predict three more cuts in 2024, bringing rates down from the current 5.25% to 4.25%. However, there's no expected change in the BoE's monetary policy in February. Moving on, the traders focus now is on Wednesday's data release. Notably, the UK's preliminary S&P Global Services PMI is expected to slightly drop from 51.4 in December to 51.0 in January. Meanwhile, the Manufacturing PMI is projected to stay steady at 47.9. Market players are closely watching these indicators for insights.

Hence, the speculation on Bank of England rate cuts is weighing on the GBP/USD pair, as lower interest rates can make the British Pound less attractive. In the meantime, the poor economic data could further impact the pair negatively.

Fed's Cautious Stance Boosts USD, Puts Pressure on GBP/USD Pair

Moreover, the Richmond Fed Manufacturing Survey reveals a decline in January's manufacturing index to -15, worse than expected. Shipments improved slightly, but new orders and employment dropped. So, Fed Governor Christopher Waller suggests a cautious approach to rate cuts, opposing a hasty decision. Atlanta Fed President Raphael Bostic hints at potential rate cuts in the third quarter, while San Francisco Fed President Mary Daly emphasizes the need for patience.

Therefore, the GBP/USD pair faces pressure as the Richmond Fed Manufacturing Survey shows a worse-than-expected decline in January's manufacturing index. Meanwhile, the US Dollar (USD) strengthens due to the Federal Reserve's cautious stance on rate cuts. The strong US dollar was seen as a key factor that kept the lid on any additional gains in the GBP/USD currency pair.

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

GBP/USD - Technical Analysis

The British Pound has seen a marginal appreciation against the US Dollar, recording a 0.07% rise to 1.26858 on January 24. This modest uptick comes as traders navigate a web of technical levels that will likely dictate the currency pair's short-term direction.

At the forefront is the pivot point at $1.2690, a critical juncture that could serve as a springboard for either trend continuation or reversal. The GBP/USD faces a series of ascending resistance levels: initial resistance sits at $1.2779, followed by $1.2853, and a more challenging level at $1.2952, which could cap upward price ambitions. On the flip side, the cable's immediate support can be found at $1.2610, with further cushions at $1.2520 and $1.2437, which could provide a fallback in case of bearish momentum.

The currency's current trading position is further complicated by the RSI, which hovers at a neutral 49, indicating no clear overbought or oversold conditions. The MACD presents a slight negative divergence at -0.00028, suggesting that bearish sentiment is not yet out of the picture. Conversely, the 50-Day EMA at 1.2699 lies in close proximity to the pivot point, adding to the confluence of indicators that traders are keenly watching.

In conclusion, the GBP/USD's near-term outlook is cautiously optimistic, with traders advised to consider long positions above the entry price of 1.26919, targeting a take-profit at 1.27370, while keeping a stop loss at 1.26658 to manage risk.

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Daily Trade Ideas

GBP/USD Price Analysis and Trade Forecast: Daily Trading Signal

By LonghornFX Technical Analysis
Jan 24, 2024
Gbpusd

Daily Price Outlook 

- GBP/USD sees slight rise; technical pivot at $1.2690 could catalyze movement.

- Resistance and support levels mapped; RSI and MACD suggest a neutral stance.

- Trading strategy: Buy above 1.26919, targeting 1.27370, with stop loss at 1.26658.

The British Pound has seen a marginal appreciation against the US Dollar, recording a 0.07% rise to 1.26858 on January 24. This modest uptick comes as traders navigate a web of technical levels that will likely dictate the currency pair's short-term direction.

At the forefront is the pivot point at $1.2690, a critical juncture that could serve as a springboard for either trend continuation or reversal. The GBP/USD faces a series of ascending resistance levels: initial resistance sits at $1.2779, followed by $1.2853, and a more challenging level at $1.2952, which could cap upward price ambitions. On the flip side, the cable's immediate support can be found at $1.2610, with further cushions at $1.2520 and $1.2437, which could provide a fallback in case of bearish momentum.

The currency's current trading position is further complicated by the RSI, which hovers at a neutral 49, indicating no clear overbought or oversold conditions. The MACD presents a slight negative divergence at -0.00028, suggesting that bearish sentiment is not yet out of the picture. Conversely, the 50-Day EMA at 1.2699 lies in close proximity to the pivot point, adding to the confluence of indicators that traders are keenly watching.

In conclusion, the GBP/USD's near-term outlook is cautiously optimistic, with traders advised to consider long positions above the entry price of 1.26919, targeting a take-profit at 1.27370, while keeping a stop loss at 1.26658 to manage risk.

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

GBP/USD - Trade Ideas

Entry Price – Buy Above 1.26919

Take Profit – 1.27370

Stop Loss – 1.26658

Risk to Reward – 1: 1.7

Profit & Loss Per Standard Lot = +$451/ -$261

Profit & Loss Per Mini Lot = +$45/ -$26

GBP/USD

Daily Trade Ideas

GBP/USD Price Analysis and Trade Forecast: Daily Trading Signal

By LonghornFX Technical Analysis
Jan 22, 2024
Gbpusd

Daily Price Outlook 

- GBP/USD nudges upward, breaching pivot point and 50 EMA, signaling a buying trend with immediate resistance in sight.

- MACD's bullish crossover aligns with a steady RSI, indicating a controlled ascent with eyes on successive resistance levels.

- Suggested trade entails a bullish entry above 1.2700, targeting 1.2750, safeguarded by a stop loss at 1.2670.

The GBP/USD pair exhibits resilience as it inches up by a modest 0.10% to 1.2715. Amidst a cautiously optimistic market sentiment, Sterling leverages a slight edge over the Dollar. Technically, the pair has carved out a pivot point at 1.2686, anchoring as a fulcrum for potential price swings. Resistance is charted progressively at 1.2785, 1.2857, and 1.2948, each a potential inflection point for bullish momentum. Should the pair retract, support layers await at 1.2615, with further cushions at 1.2518 and 1.2447, ready to absorb any downward pressure.

The RSI at 56 suggests moderate momentum, neither overextended in bullish fervor nor bearish retreat. The MACD indicator offers a nuanced narrative; a slight bullish convergence as the MACD line (0.00056) overtakes the signal (0.00026), hinting at a creeping bullish sentiment that could propel the pair forward.

The 50-day EMA at 1.2697 has been eclipsed, a testament to the pair's upward drive. This breach, coupled with a cascade of bullish candles anchoring above the EMA line, underlines a potential strategic entry point for long positions.

Concluding this technical synopsis, GBP/USD's current posture is tentatively bullish, presenting a buying opportunity above the 1.2700 threshold, with an initial profit objective at 1.2750 and a stop loss to safeguard against reversal at 1.2670.

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

GBP/USD - Trade Ideas

Entry Price – Buy Above 1.2700

Take Profit – 1.2750

Stop Loss – 1.2670

Risk to Reward – 1: 1.6

Profit & Loss Per Standard Lot = +$500/ -$300

Profit & Loss Per Mini Lot = +$50/ -$30

GBP/USD

Daily Trade Ideas

GBP/USD Price Analysis – Jan 22, 2024

By LonghornFX Technical Analysis
Jan 22, 2024
Gbpusd

Daily Price Outlook

Despite the softer UK Retail Sales data, the GBP/USD currency pair maintained its upward trend and remained well bid around the 1.2720 level. However, the upticks in the GBP/USD pair were mainly bolstered by the sluggish US Dollar amid a risk-on sentiment. Meanwhile, the Pound (GBP) gained ground against the US Dollar (USD), likely due to a positive market sentiment. In contrast ot this, the GBP/USD pair faced challenges after disappointing December Retail Sales data was released in the United Kingdom (UK) on Friday.

UK Retail Sales Decline Poses Challenges for BoE and GBP/USD Pair

It's worth noting that the Office for National Statistics (ONS) released December's Retail Sales data. The numbers show a significant drop of 3.2%, surpassing the expected decrease of 0.5%. On a yearly basis, there's a 2.4% decline, opposite to the expected increase of 1.1%. This sharp fall in consumer spending could create a challenge for the Bank of England (BoE) in maintaining a tight policy without risking an economic downturn. BoE policymakers are closely watching for more data to see if underlying inflation is moving toward the targeted 2.0% level in a timely and sustainable way.

Therefore, the sharp decline in UK retail sales may pressure the GBP/USD pair as it signals weakened economic activity. Investors may anticipate potential challenges for the Bank of England's policy decisions.

Geopolitical Tensions and Rate-Cut Expectations Impact USD and GBP/USD Pair

Furthermore, the broad-based US Dollar is down for the second day, driven by lower 10-year US yields. However, this reflects expectations that the US Federal Reserve (Fed) might cut rates more than other major central banks in 2024. The DXY hovers around 103.10, with the 10-year bond yield at 4.11%. However, the US Dollar could get support due to its safe-haven status amid concerns about Red Sea maritime trade. In the meantime, the geopolitical risk may boost demand for the US Dollar, pressuring the GBP/USD pair.

Therefore, the weaker US Dollar, driven by lower yields, may provide some relief for the GBP/USD pair. However, geopolitical tensions in the Red Sea favor the US Dollar's safe-haven status, exerting downward pressure on GBP/USD.

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

GBP/USD - Technical Analysis

The GBP/USD pair exhibits resilience as it inches up by a modest 0.10% to 1.2715. Amidst a cautiously optimistic market sentiment, Sterling leverages a slight edge over the Dollar. Technically, the pair has carved out a pivot point at 1.2686, anchoring as a fulcrum for potential price swings.

Resistance is charted progressively at 1.2785, 1.2857, and 1.2948, each a potential inflection point for bullish momentum. Should the pair retract, support layers await at 1.2615, with further cushions at 1.2518 and 1.2447, ready to absorb any downward pressure.

The RSI at 56 suggests moderate momentum, neither overextended in bullish fervor nor bearish retreat. The MACD indicator offers a nuanced narrative; a slight bullish convergence as the MACD line (0.00056) overtakes the signal (0.00026), hinting at a creeping bullish sentiment that could propel the pair forward.

The 50-day EMA at 1.2697 has been eclipsed, a testament to the pair's upward drive. This breach, coupled with a cascade of bullish candles anchoring above the EMA line, underlines a potential strategic entry point for long positions.

Concluding this technical synopsis, GBP/USD's current posture is tentatively bullish, presenting a buying opportunity above the 1.2700 threshold, with an initial profit objective at 1.2750 and a stop loss to safeguard against reversal at 1.2670.

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GBP/USD Price Analysis – Jan 17, 2024

By LonghornFX Technical Analysis
Jan 17, 2024
Gbpusd

Daily Price Outlook

Despite the bullish US dollar and softer-than-projected UK wage growth, along with ongoing geopolitical tensions in the Middle East, the GBP/USD currency pair maintained its upward trend and remained well bid above the 1.2650 level. The reason for this upward trend can be attributed to the upcoming December UK inflation data, measured by the Consumer Price Index (CPI). The CPI figure is expected to rise by 0.2% MoM, following a 0.2% drop in November.

UK Labor Market Update: Mixed Signals Raise Concerns and Potential Impact on GBP/USD Pair

The latest data from the Office for National Statistics (ONS) shows that the UK's unemployment rate held steady at 4.2% in the three months leading up to November, matching expectations. However, there is a slight concern as the number of people claiming jobless benefits increased by 11.7K in December, up from 0.6K in November.

On a positive note, the employment change for November saw a gain of 73K, compared to the previous 50K. Yet, wage growth has slowed down, with average earnings (excluding bonuses) dropping to 6.6%, and earnings (including bonuses) growing at a slower pace of 6.5%. This may prompt the Bank of England to consider cutting interest rates in the near future.

Therefore, the steady unemployment rate and positive employment change support GBP, but concerns over rising jobless claims and slowed wage growth may pressure the currency, impacting the GBP/USD pair.

Geopolitical Tensions and Fed Outlook Propel US Dollar, Creating Headwinds for GBP/USD Pair

Furthermore, tensions in the Middle East are boosting the appeal of the US Dollar as a safe-haven. A recent US airstrike on a Houthi missile facility in Yemen aimed to counter an imminent threat to ships. Additionally, decreased speculation of a Federal Reserve rate cut is lifting the Greenback. Fed Governor Christopher Waller emphasized a cautious approach to rate adjustments, reducing the likelihood of a cut. According to the CME FedWatch tool, investors now see a 67% chance of rate hikes starting in March. This development acts as a hurdle for the GBP/USD pair, favoring the stronger US Dollar.

Therefore, the rising Middle East tensions and reduced Fed rate cut expectations lift the US Dollar, posing a challenge for the GBP/USD pair.

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

GBP/USD - Technical Analysis

On January 17, the GBP/USD pair is trading at 1.25998, showing a decline of 0.28%. This movement in the forex market is critical for traders focusing on the short-term trends of the British Pound against the US Dollar. The 4-hour chart timeframe provides a detailed view of the key price levels that are pivotal for the day's trading.

The pivot point for GBP/USD is set at 1.25768, serving as a crucial juncture for determining the pair's direction. Resistance levels are identified at 1.26240, 1.26891, and 1.27375, which could pose challenges for bullish movements. Conversely, support levels are found at 1.28014, 1.25271, and 1.24786, offering potential floors for the pair.

Technical indicators shed light on the pair's momentum. The RSI is at a low of 26, indicating an oversold market condition that might lead to a potential rebound. The MACD stands at -0.00123, with the MACD line below the signal line at -0.00315, suggesting a bearish trend. The 50-Day EMA is currently at 1.26999, reinforcing the resistance zone.

A significant chart pattern observed is the violation of the upward trendline around the 1.2645 mark. The formation of a bearish engulfing pattern below this level suggests a selling trend, indicating a potential continuation of the downward momentum.

The overall trend for GBP/USD appears bearish. Traders might consider a sell strategy below 1.26381, with a take profit target at 1.25876 and a stop loss at 1.26702. The short-term forecast suggests the pair may test lower support levels, unless it breaks above the immediate resistance.

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GBP/USD