GBP/USD Price Analysis: Tumbles below crucial 1.2500 as bears move in
- GBP/USD drops 0.30%, US Dollar rises on positive US trade and labor data.
- The GBP/USD struggles below 200-DMA at 1.2550, trending down.
- RSI indicates bearish momentum; sellers control the market.
- Recovery above 1.2500 could retest 200-DMA, with resistance at 1.2569 and 50-DMA at 1.2613.
The Pound Sterling tumbled in early trading during the North American session, dropping below the 1.2500 figure amid renewed US Dollar strength. Data from the United States showed that the Balance of Trade deficit tightened while the labor market remained tight, as revealed by the Initial Jobless Claims report. The GBP/USD trades at 1.2488, down 0.30%.
GBP/USD Price Analysis: Technical outlook
From a technical standpoint, the GBP/USD is showing a neutral to downward bias. This is a result of buyers failing to breach the significant resistance at the 200-day moving average (DMA) at 1.2550. This failure has further intensified the major’s drop below the 1.2500 figure, potentially paving the way for a test of the latest cycle low seen at 1.2299, the April 22 low.
Momentum points to a continuation of the downtrend, as the Relative Strength Index (RSI) turned bearish on April 30. As of writing, it aims downward, meaning sellers remain in charge.
On the other hand, if buyers reclaim 1.2500, they must reclaim the 200-DMA ahead of testing the April 29 high at 1.2569. Once cleared, the next stop would be the 1.2600 mark, followed by the 50-DMA at 1.2613. Further gains are seen above the 100-DMA at 1.2644.
GBP/USD Price Action – Daily Chart
Author
Christian Borjon Valencia
FXStreet
Christian Borjon began his career as a retail trader in 2010, mainly focused on technical analysis and strategies around it. He started as a swing trader, as he used to work in another industry unrelated to the financial markets.
