Sterling ended the week considerably lower against the US dollar, recording its largest one-week decline since July 2023 (-1.5%).
In light of the slew of UK economic data on the docket this week—wages, CPI inflation and retail sales—this will be a particularly key market to monitor.
Monthly resistance holding firm
Price action on the monthly chart continues to seek deeper waters south of resistance at $1.2715. While one may argue that this chart is now in the early stages of an uptrend, the high (arrow) at $1.3142, located near the next layer of resistance at $1.3111, would likely need to be breached before a long-term uptrend can be confirmed with any conviction. As things stand, the monthly support level at $1.2173 is viewed as the next logical longer-term downside target for GBP bears in the longer term.
Daily support calling for attention
Meanwhile, on the daily timeframe, Friday’s price movement absorbed bids at support from $1.2527 (now a potential resistance) and pencilled in a one-sided decline. This has left price action within shouting distance of an interesting area of support between $1.2331 and $1.2366, consisting of a handful of Fibonacci ratios, channel support (extended from the low of $1.2513) and ascending support (drawn from the low of $1.2037). What is also technically evident on the daily scale is the Relative Strength Index (RSI) fast-approaching oversold space—this could enter the noted area and perhaps draw up positive divergence at the point in which price action challenges the above-noted support area.
H1 chart: Sell rallies?
The resistance level from $1.2462 and the decision point area at $1.2498-$1.2489 jump out as reasonable zones of resistance to have on the watchlist this week.
The rationale is simple. Both monthly and daily charts exhibit scope to navigate lower levels; the daily chart shows support is not expected to enter the fray until $1.2331-$1.2366, which leaves H1 price action technically free to take aim at the $1.24 handle, at least. With that, short-term traders moderately sold into a pullback at $1.2462 on Friday, which may be enough to trigger further underperformance this week towards $1.24. Though should a pop higher unfold, eyes will be on $1.2498-$1.2489 as a potential area of resistance.
This material on this website is intended for illustrative purposes and general information only. It does not constitute financial advice nor does it take into account your investment objectives, financial situation or particular needs. Commission, interest, platform fees, dividends, variation margin and other fees and charges may apply to financial products or services available from FP Markets. The information in this website has been prepared without taking into account your personal objectives, financial situation or needs. You should consider the information in light of your objectives, financial situation and needs before making any decision about whether to acquire or dispose of any financial product. Contracts for Difference (CFDs) are derivatives and can be risky; losses can exceed your initial payment and you must be able to meet all margin calls as soon as they are made. When trading CFDs you do not own or have any rights to the CFDs underlying assets.
FP Markets recommends that you seek independent advice from an appropriately qualified person before deciding to invest in or dispose of a derivative. A Product Disclosure Statement for each of the financial products is available from FP Markets can be obtained either from this website or on request from our offices and should be considered before entering into transactions with us. First Prudential Markets Pty Ltd (ABN 16 112 600 281, AFS Licence No. 286354).
Recommended Content
Editors’ Picks
EUR/USD flirts with daily tops near 1.0730
The continuation of the selling pressure in the Greenback now lends further oxygen to the risk complex, encouraging EUR/USD to revisit the area of daily highs near 1.0730.
USD/JPY looks stable around 156.50 as suspicious intervention lingers
USD/JPY remains well on the defensive in the mid-156.00s albeit off daily lows, as market participants continue to digest the still-unconfirmed FX intervention by the Japanese MoF earlier in the Asian session.
Gold advances for a third consecutive day
Gold fluctuates in a relatively tight channel above $2,330 on Monday. The benchmark 10-year US Treasury bond yield corrects lower and helps XAU/USD limit its losses ahead of this week's key Fed policy meeting.
Week Ahead: Bitcoin could surprise investors this week Premium
Two main macroeconomic events this week could attempt to sway the crypto markets. Bitcoin (BTC), which showed strength last week, has slipped into a short-term consolidation.
Five Fundamentals for the week: Fed fears, Nonfarm Payrolls, Middle East promise an explosive week Premium
Higher inflation is set to push Fed Chair Powell and his colleagues to a hawkish decision. Nonfarm Payrolls are set to rock markets, but the ISM Services PMI released immediately afterward could steal the show.