Despite falling around 1.3450 in the early European session on Thursday, the Pound rose sharply in the lead-up to the start of the United States’ trading day.
Due to renewed selling pressure on the Greenback due to dropping interest rates, the pair is currently moving in the positive region above 1.3500.
A Summary Of The Technical Areas
GBP/USD CHART
After briefly dropping below the rising trend line that has been in place since December 21, the Pound/Dollar has maintained its position above it.
The 20-period simple moving average (SMA) on the four-hour chart and the trend line serve as initial support around 1.3440. More losses toward 1.3400 (psychological level, stationary level) might be noticed if that level is turned into resistance.
On the upswing, 1.3500 (psychological level, daily top) serves as the first resistance level before 1.3550 (second resistance level) (static level, former support).
Meanwhile, the four-hour chart’s Relative Strength Index (RSI) signal has fallen to 60, indicating that the bullish momentum is beginning to wane.
An Overview Of The Basics
The Pound/Dollar regained some of its intraday dips. It was last seen moving in the neutral zone, underneath the important 1.3500 psychological line, corresponding to the monthly high reached earlier this Thursday.
Looking at the bigger picture, the recent strong rebound move from the YTD low has come to a halt around the 50% Fibonacci level of the 1.3834-1.3161 collapse, which marks the halfway point of the slide.
This aligns with the swing high reached on November 19 and should serve as a critical turning point for short-term traders.
The Pound-to-Dollar exchange rate has reversed course after reaching its highest level in over a month at 1.3505 during Asian trading hours.
Currency volatility is likely to intensify ahead of the New Year’s break as the Dollar’s market capitalization continues to influence the pair’s behavior into 2022.
According to the technology standpoint, the British Pound may struggle to regain its former strength. Still, buyers may attempt to retake control as long as essential support areas remain in place, as seen in the chart below.
On Wednesday, the Dollar was subjected to significant negative pressure during the US trading day. When it comes to the Dollar’s value, the absence of fundamental drivers meant that the currency failed to find demand despite increasing market mood.
Despite this, higher US Treasury bond rates assisted the USD in recouping some of its losses and drove the GBP/USD pair to fall further in value.
The weekly Initial Unemployment Claims statistics and the ISM Chicago PMI for December in the United States will be closely scrutinized for signs of renewed momentum.
On the other hand, market participants are likely to pay little or no attention to these announcements.
