GBP/USD Analysis and Path Ahead

• 10 January, 2024 Ruchit Thakur

GBP/USD Analysis and Path Ahead

Evening Update: Will the GBP/USD pair continue to drop after retracing from 1.2800 at the 200 DMA?

The GBP/USD pair is presently trading below the 200 DMA on the weekly chart, having encountered strong resistance from the 1.2800–1.2850 range. Since GBP/USD is weighted at 12% in DXY, the primary reason for the decrease in GBP/USD was the notable increase in the Dollar Index. As we discussed in our article, the Dollar Index was trading under a strong support range of 100.50–100.80. Every increase, according to the chart, presents a chance to sell GBP/USD.

• Following a robust decline, the GBP/USD pair dropped below the 200 DMA.
• The chart indicates that the 200 DMA and the trendline aggressively rejected the GBP/USD pair. It could therefore make its way into the 1.2400 and 1.2100 zones, respectively.
• The 200 DMA on the weekly chart is located at 1.2850, which is the point where it converges with trendline resistance. Given that any rise in price could be met with significant supply, we may anticipate a further decline in the price of GBP/USD. 

Please see the above-mentioned chart for the GBP/USD resistance and its movement around the weekly 200 DMA. The trendline resistance was there around 1.2800–1.2850 zone and GBP/USD fell and is now trading near the 1.2700 zone. About DXY, our study pointed out that the Dollar Index was anticipated to increase from its range of 100.50 to 100.80, a solid support zone. Because the two are negatively correlated, when the Dollar Index rises, GBP/USD falls, and vice versa. Thus, a major factor contributing to the decline in GBP/USD was the increase in DXY.

Potential areas of further fall for the GBP/USD pair include the 1.2400 and 1.2100 zones. DXY may increase to the 1.0350 and 1.0400 zones, respectively, as the GBP/USD is inversely proportional to the Dollar Index, as previously mentioned.

Please check the support and resistance level of GBP/USD on the weekly chart. All levels are in spot chart :