The British pound has just stopped the downtrend around a potential technical support area.
Will GBP/USD find enough demand at this level to extend the long-term trend?
We check the daily chart!
GBP/USD 1 Hour Forex Chart by TradingView
In case you missed the latest weekly forex market summary, you should know that the US dollar got a lot of support from the change in Federal Reserve interest rate expectations and a possible Trump presidency leading to higher inflation in the US.
The British pound was no slouch either, maintaining gains against its “riskier” foreign currency counterparts after a member of the Bank of England hinted at higher final interest rates and a more gradual approach to easing policies.
Remember that directional biases and volatility conditions in market prices are usually driven by fundamentals. If you haven’t done your homework on the USD and GBP yet, it’s time to check the economic calendar and stay up to date with daily essential news!
The GBP/USD pair bounced lower from the 1.3400 resistance level, and traded in a downward trend before reaching current levels at 1.2900.
Will this week’s themes extend GBP/USD’s long-term uptrend?
We take a closer look at the 1.2900 level, which is not far from the 100 SMA on the daily chart and trend line support that has been in place since April.
Bullish candles and sustained trading above 1.2950 have set GBP/USD for a potential bounce from the 61.8% Fibonacci retracement level of the October downward swing.
Alternatively, GBP/USD may extend its downtrend and find more sustained upward pressure around the 1.2800 psychological level, S2 pivot point support, and the 200 SMA area instead.
But if GBP/USD starts to show more bearish candles, or if the pair breaks below and is trading consistently below the trend line support we have identified, the pair may also head towards earlier inflection points such as 1.2675 or 1.2550.
Regardless of which bias you end up trading, be sure to check out potential catalysts that could impact GBP/USD prices!