GBP/USD Price Analysis: 1.1700 appears under threat after bear flag confirmation

GBP/USD is at two-year lows, with a break below 1.1700 inevitable.
The US dollar cheers Powell’s comments-led risk-off sentiment.
Bear flag confirmation on the 1D chart opens more downside for cable.

Dhwani Mehta FXStreet

GBP/USD is closing in on 1.1700, extending Friday’s decline amid an extension of risk-off sentiment and the US dollar recovery. Asian traders react negatively to Fed Chair Jerome Powell’s Jackson Hole remarks, as reflective of the 0.80% drop in the US S&P 500 futures in opening trades.

Expectations of higher rates for longer have ramped up after Powell’s comments, stoking growth fears and boding ill for global stocks. Investors continue to seek refuge in the safe-haven US dollar at the expense of high-beta currencies such as the British pound.

Meanwhile, the UK currency battles a dire economic outlook amid surging energy costs, which accentuates the country’s cost-of-living crisis. Looking ahead, the moves in the major could be exaggerated amid low volumes and minimal volatility, as the British traders are away, observing the Summer Bank holiday on Monday.

Amidst a lack of top-tier US economic data, traders will await Fed official Lael Brainard’s speech for fresh trading impetus.

As observed on cable’s daily chart, the downside break below the rising trendline support at 1.1777 on Friday has confirmed a bearish flag.

The downtrend could now extend towards the 1.1650 psychological level. Ahead of that the 1.1705 demand area will challenge the bullish commitments. That zone is the confluence of the two-year lows and the falling (dashed) trendline.

Also read: GBP/USD Weekly Forecast: Braces for more pain in the NFP week ahead

The 14-day Relative Strength Index (RSI) inches lower while sitting just above the oversold region, suggesting that there is more room for a downside move. Adding credence to the bearish potential, the 21 and 50-Daily Moving Averages (DMA) bearish crossover confirmed earlier this week also remains in play.

Alternatively, bulls need a sustained move above the rising trendline resistance at 1.1879 to negate the near-term bearish bias. The next significant upside target is aligned at 1.1900 the round figure. The August 19 high at 1.1937 will be next on buyers' radars.

GBP/USD: Daily chart

GBP/USD: Additional technical levels

GBP/USD

Overview
Today last price	1.1715
Today Daily Change	-0.0021
Today Daily Change %	-0.18
Today daily open	1.1739

Trends
Daily SMA20	1.2022
Daily SMA50	1.2049
Daily SMA100	1.2305
Daily SMA200	1.2835

Levels
Previous Daily High	1.19
Previous Daily Low	1.1733
Previous Weekly High	1.19
Previous Weekly Low	1.1717
Previous Monthly High	1.2246
Previous Monthly Low	1.176
Daily Fibonacci 38.2%	1.1797
Daily Fibonacci 61.8%	1.1837
Daily Pivot Point S1	1.1682
Daily Pivot Point S2	1.1624
Daily Pivot Point S3	1.1515
Daily Pivot Point R1	1.1849
Daily Pivot Point R2	1.1958
Daily Pivot Point R3	1.2016

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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