- GBP/USD retreats sharply from a four-day top amid the emergence of fresh USD buying.
- A break below the 200-day SMA is needed to support prospects for any further downside.
- Traders now look to Fed Chair Jerome Powell’s testimony for some meaningful impetus.
The GBP/USD pair comes under some renewed selling pressure following an early uptick to the 1.2065 area, or a multi-day top touched earlier this Tuesday and extends the downfall through the mid-European session. The pair slides back below the 1.2000 psychological mark in the last hour and is pressured by the emergence of fresh US Dollar buying.
Growing acceptance that the Federal Reserve will stick to its hawkish stance and keep interest rates higher for longer turn out to be a key factor that continues to act as a tailwind for the USD. Apart from this, looming recession risks further seem to benefit the Greenback's relative safe-haven status amid some repositioning trade ahead of Fed Chair Jerome Powell's semi-annual testimony before the Senate Banking Committee.
Looking at the broader picture, the two-way price moves witnessed over the past four weeks or so constitute the formation of a rectangle on the daily chart. The lower end of the trading band coincides with a technically significant 200-day Simple Moving Average (SMA). Bearish traders need to wait for a convincing break through the said support, currently pegged around the 1.1910 area, before placing fresh bets.
The GBP/USD pair might then turn vulnerable to accelerate the fall towards retesting the YTD low, around the 1.1840 region touched in January. Some follow-through selling will complete a bearish double-top pattern formation near the 1.2445-1.2450 area and pave the way for deeper losses. The downward trajectory could eventually drag spot prices below the 1.1800 mark, towards the 1.1725 support zone.
On the flip side, the daily swing high, around the 1.2065 area, now seems to act as an immediate barrier ahead of the 1.2100 mark. Any subsequent move-up could attract fresh sellers and remain capped near the 50-day SMA, around the 1.2135-1.2140 region. That said, a sustained strength beyond could lift the GBP/USD pair towards the 1.2200 mark en route to the February 14 peak, around the 1.2265-1.2270 zone.
GBP/USD daily chart
Key levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to gains near 1.0700, awaits key US data
EUR/USD clings to gains near the 1.0700 level in early Europe on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data.
USD/JPY keeps pushing higher, eyes 156.00 ahead of US GDP data
USD/JPY keeps breaking into its highest chart territory since June of 1990 early Thursday, recapturing 155.50 for the first time in 34 years as the Japanese Yen remains vulnerable, despite looming intervention risks. The focus shifts to Thursday's US GDP report and the BoJ decision on Friday.
Gold closes below key $2,318 support, US GDP holds the key
Gold price is breathing a sigh of relief early Thursday after testing offers near $2,315 once again. Broad risk-aversion seems to be helping Gold find a floor, as traders refrain from placing any fresh directional bets on the bright metal ahead of the preliminary reading of the US first-quarter GDP due later on Thursday.
Injective price weakness persists despite over 5.9 million INJ tokens burned
Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price.
Meta takes a guidance slide amidst the battle between yields and earnings
Meta's disappointing outlook cast doubt on whether the market's enthusiasm for artificial intelligence. Investors now brace for significant macroeconomic challenges ahead, particularly with the release of first-quarter GDP data.