GBP/USD Price Analysis: Drops amid UK recession fears post BoE rate hike

GBP/USD experiences dip, shedding 0.17% following BoE’s surprise 50 bps rate hike.
Technicals suggest a downward trend, with RSI exiting overbought conditions.
Key levels to watch: support at a weekly low of 1.2691 and resistance at a YTD high of 1.2848.

Christian Borjon Valencia FXStreet

GBP/USD opened the Asian session with a bearish mood after hitting a weekly high of 1.2841 to see those gains evaporate as UK recession fears reignited, post the Bank of England 50 bps rate hike. The GBP/USD closed on Thursday with losses of 0.17%. At the time of writing, the GBP/USD exchanges hands at 1.2742.

Must read: GBP/USD dives following unexpected BoE rate hike, sparking UK’s recession concerns

GBP/USD Price Analysis: Technical outlook

The GBP/USD remains upward biased, and the dip towards the 1.2720 area opened the door for buyers to re-enter at a lower price level. Nevertheless, the Relative Strength Index (RSI) exited overbought conditions, which triggered a sell signal, though it’s pending breaking support of the weekly low at 1.2691.

If GBP/USD drops below the latter, the next support would be the 20-day Exponential Moving Average (EMA) at 1.2635, followed by the psychological 1.2600 price level. Once cleared, the next support would be the confluence of the June 13 daily low and the 50-day EMA at 1.2499-1.2522.

Failure to drop below the weekly low, the GBP/USD would be set to re-test the 1.2800 figure. The next stop will be the year-to-date (YTD) high at 1.2848 before reaching 1.2900.

GBP/USD Price Action – Daily chart

GBP/USD

Overview
Today last price	1.2748
Today Daily Change	-0.0022
Today Daily Change %	-0.17
Today daily open	1.277

Trends
Daily SMA20	1.2551
Daily SMA50	1.2513
Daily SMA100	1.2336
Daily SMA200	1.2063

Levels
Previous Daily High	1.2803
Previous Daily Low	1.2691
Previous Weekly High	1.2848
Previous Weekly Low	1.2487
Previous Monthly High	1.268
Previous Monthly Low	1.2308
Daily Fibonacci 38.2%	1.276
Daily Fibonacci 61.8%	1.2734
Daily Pivot Point S1	1.2707
Daily Pivot Point S2	1.2643
Daily Pivot Point S3	1.2595
Daily Pivot Point R1	1.2818
Daily Pivot Point R2	1.2866
Daily Pivot Point R3	1.2929

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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