- GBP/USD witnessed fresh selling on Thursday and reversed the previous day’s positive move.
- Resurgent USD demand was seen as a key factor that exerted downward pressure on the pair.
- Mixed technical indicators on hourly/daily charts warrant some caution for aggressive traders.
The GBP/USD pair continued losing ground through the first half of the European session and dropped to the 1.3810 region, or fresh daily lows in the last hour.
Resurgent US dollar demand was seen as a key factor that prompted fresh selling around the GBP/USD pair on Thursday. Despite signs of inflationary pressure in the US, investors seem convinced about an imminent Fed taper announcement later this year. This, along with a modest pickup in the US Treasury bond yields and the prevalent cautious mood, underpinned the safe-haven greenback.
Looking at the technical picture, the GBP/USD pair has now reversed the overnight bounce from sub-1.3800 levels, or weekly lows and was last seen hovering near the 200-period SMA on the 4-hour chart. This is closely followed by support marked by the lower end of an ascending channel, extending from August monthly swing lows, which should now act as a key pivotal point for traders.
Meanwhile, oscillators on hourly charts have been gaining negative traction but are yet to confirm a bearish bias on the daily chart. This makes it prudent to wait for a convincing break below the channel support, currently around the 1.3785 area, before positioning for any further decline. The GBP/USD pair might then slide to the 1.3735 intermediate support en-route the 1.3700 mark.
On the flip side, the 1.3850-55 region now seems to have emerged as immediate strong resistance. This is followed by the 1.3885-90 supply zone and the 1.3900 mark, which if cleared decisively will negate the negative outlook. Some follow-through buying beyond the mentioned hurdles will set the stage for a move beyond mid-1.3900s, towards reclaiming the key 1.4000 psychological mark.
GBP/USD 4-hour chart
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.