GBP/USD analysis: increasing bearish potential as Brexit looms

Valeria Bednarik FXStreet

GBP/USD Current price: 1.2405

After spending the week struggling to regain the 1.2500 level, the GBP/USD pair plunged on Friday, following the release of much worse-than-expected UK Retail Sales figures. Sales declined 0.3% in January, while excluding fuel, rose by 0.2% in the month, well below market's expectations. Year-on-year, sales rose by 1.5% against the 3.4% advance expected, while ex fuel sales grew by just 2.6%. December readings suffered downward revisions, adding to evidence that rising inflation is finally affecting consumption in the UK. The daily chart for the pair shows that it settled below 1.2430, the 38.2% retracement of the latest bullish run, while technical indicators resumed their declines within negative territory. Early attempts to break higher were contained by a now modestly bearish 20 SMA, currently at 1.2510. In the 4 hours chart, the price is also developing below its 20 SMA which converges with a horizontal 200 EMA around 1.2460, while the Momentum indicator turned lower within neutral territory, but the RSI heads south around 36, maintaining the risk towards the downside. February low at 1.2346, at the 50% retracement of the mentioned rally, is the level to break to confirm a new leg lower sub-1.2200 for these next few days.

Support levels: 1.2380 1.2345 1.2300

Resistance levels: 1.2430 1.2460 1.2510

View Live Chart for the GBP/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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