The GBP/USD currency pair is reversing course to the upside. Credit Suisse analysts, on the other hand, retain their fundamentally pessimistic prognosis for 1.3277, followed by 1.3189/35. Although the GBP/USD is rebounding from its 1.3411 September low, the latest breach beneath the support, the fact that the price remains under falling 13-day, 55-day, and 200-day moving averages, the current huge top, and negative continuation formation, as well as the lack of momentum, all contribute to the fundamental negative picture.
Initially, support is indicated around 1.3402, then 1.3352/50, under which should re-establish the decline for support at 1.3277, in front of what is the primary aim of 1.3189/35. Credit Suisse analysts said they expect the 1.3189/35 zone to serve as a good floor, and they expect a new stabilization phase to develop shortly. On the other hand, a direct breach would exacerbate the bearish picture, with support expected to be found next around 1.3106, followed by 1.3000, and then 1.2855/29.
Fundamentals and Analytical Overview
Despite a brief rebound following positive employment data from the United Kingdom, the Pound rose to four-day highs against the Dollar on Friday morning. The duo was last seen moving in the middle of the 1.3400s, still up more than 0.30% on the trading day. The most recent employment data from the United Kingdom bolstered the argument for an immediate 15 basis point rate rise by the Bank of England in December, while also providing a boost to the Pound. Nonetheless, continued US Dollar purchasing kept the GBP/USD pair’s advances in check amid fears that Britain may use Article 16 and suspend sections of the Northern Ireland Protocol as a result of Brexit.
GBP/USD CHART Source: Tradingview.com
From a technical standpoint, the intraday upward movement came to a halt just before a confluence obstacle, which was formed by the 200-hour simple moving average and a negatively sloped trend line. The previously indicated resistance level, which is now located around the 1.3775-80 zone, should serve as a critical turning point and define the direction of the following leg of the GBP/USD pair’s trend move. Conversely, chart patterns on hourly charts have been gaining significant positive momentum, but on the daily chart, they are still firmly in the negative region, despite recent gains.
As a result, caution is advised, and any further strengthening move should be postponed until a sustained break of the confluence resistance has occurred. The GBP/USD pair may attempt to break over the psychologically significant 1.3500 level and push the trend even further towards the next crucial barrier at the 1.3560-65 supply zone. If there is some follow-through purchasing, the Bulls should be able to make a fresh effort to break past the 1.3600 round-figure barrier.
On the other hand, any major decline may continue to find solid support around the 1.3400 level, which if breached would expose YTD dips in the 1.3355-50 range, which were last Friday’s lows. This would be interpreted as a new trigger for negative traders, making the GBP/USD pair sensitive to resuming its downward trend that has been in place for more than two weeks.