- The bearish pressure is high after failing to stay above the 1.23 psychological level.
- The UK data should move the rate tomorrow.
- The warning line (wl1) stands as the next downside target.
In a dramatic turn of events, the GBP/USD price is currently in the red zone, showing a strong inclination towards hitting fresh lows. As of now, it stands at 1.2262, and all eyes are on its journey in the trading arena.
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The main culprit behind this downward trend is the DXY’s current rally, compelling the greenback to pull the pair further down. The Dollar Index’s bullish bias in the short term is intensifying the downside pressure, making traders and investors closely watch the market dynamics.
In the latest update on the UK front, the RICS House Price Balance has been reported at -63%, slightly better than the expected -65% and an improvement from the previous -67%. This news, however, might not be enough to counter the strong retreat prompted by the Dollar’s dominance.
Looking ahead, all eyes are on the US Unemployment Claims indicator, which could potentially jump to 218K in the last week, up from 217K in the previous period. The imminent speech by Fed Chair Powell is also sending shockwaves through the market, creating an atmosphere of anticipation and uncertainty.
But the real game-changer could be on the horizon. Tomorrow, the UK is set to release a slew of crucial economic data, including GDP, Prelim GDP, Goods Trade Balance, Construction Output, Index of Services, Industrial Production, and Manufacturing Production. Simultaneously, the US will publish the Prelim UoM Consumer Sentiment data. The outcome of these releases has the power to shift market sentiments and potentially rescue the Pound from its current downward spiral.
GBP/USD price technical analysis: Bears turning strong
In a technical twist, the GBP/USD pair is grappling with challenges as it struggles to find stability above the ascending pitchfork’s warning line (wl1). This is a clear signal of weary buyers, indicating a shift in market dynamics. Adding to the complexity, the pair has now slipped below the lower median line (lml), sounding the alarm for a potential downside reversal.
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A closer look at the hourly chart reveals that the rate has not only breached the lower median line but has also tested the broken line, solidifying the breakdown. The next hurdle in its downward journey is the downside warning line (wl1), which serves as both a target and an obstacle. The extent of the drop hinges on a valid breakdown through this dynamic support.
The pressure on the downside has intensified, especially after the pair’s failure to sustain itself above the psychologically significant 1.2300 level and the weekly pivot point of 1.2290. These setbacks have contributed to the current precarious situation, keeping traders on edge as they anticipate the potential activation of a larger drop in the near future.
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