GBP to USD Holds Steady Within Range Against Dollar
The GBP/USD currency pair remains within a range-bound pattern, according to economists at UOB Group. Analysts suggest that the pair is likely to continue navigating between the levels of 1.2650 and 1.2850 for the time being, indicating a lack of significant directional movement.
During Wednesday’s trading session, the British pound experienced a substantial decline against the US dollar, dropping toward the critical support level of 1.2650. This downward movement reflects increased selling pressure on the pound and highlights the challenges faced by the currency.
Technical Analysis Indicates Potential Reversal for GBP/USD
Technical analysis of the 100 sterling to USD pair suggests a reversal in the making. The recent plunge towards the 1.2650 level, which previously acted as strong resistance, indicates the presence of “market memory.” Market participants may view this as an opportunity to buy, particularly considering the pound’s overall strong uptrend and the Bank of England’s commitment to combat inflation. However, a pullback after a prolonged upward movement is not a surprise. Especially, considering that the market cannot sustain a single direction indefinitely.
Looking at the longer-term outlook, the British Pound coin is anticipated to gain strength and potentially reach the 1.30 level if fundamental factors remain consistent. In light of prevailing inflation concerns, central banks are expected to maintain a tight monetary policy. This backdrop supports a “buy on the dip” sentiment, where market participants seek buying opportunities during pullbacks. The 50-day exponential moving average (EMA) serves as a potential support level of around 1.2575, while resistance levels of 1.2750 and 1.2850 may come into play if the pound rebounds.
GBP/USD Stability Amidst USD/JPY Strength and AUD/USD Weakness
The pound remains relatively unchanged against the dollar. Besides, the US dollar continues to advance against the Japanese yen (USD/JPY) and the Australian dollar (AUD/USD). The contrasting movements in these currency pairs indicate the broader dynamics influencing the foreign exchange market.
Tuesday’s trading session saw a partial recovery for GBP to Dollar forecast, potentially signaling a resumption of an upward trajectory. However, to reaffirm a short-term bearish view, a decline below the $1.27 level would be necessary. That would open the possibility of testing trendline support from the lows observed in late May. Conversely, a more substantial recovery could bring the mid-June highs above $1.28 back into focus as potential resistance levels to watch.
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