GBP/USD Analysis

• 24 January, 2024 Ruchit Thakur

GBP/USD Analysis

Evening update: GBP/USD is currently trading at 1.2750. Will it bounce or continue to fall ?

The GBP/USD pair is currently trading below the 200 DMA on the weekly chart, having met firm resistance in the 1.2800-1.2850 zone. Because GBP/USD is weighted at 12% in DXY, the fundamental reason for the drop in GBP/USD was a significant increase in the Dollar Index. As we mentioned in our post, the Dollar Index was trading under a firm support level of 100.50-100.80. Every gain, according to the chart, represents an opportunity 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 note the above-mentioned chart for the GBP/USD resistance and its movement near the weekly 200 DMA. The trendline resistance was located between 1.2800 and 1.2850, and GBP/USD declined to trade near 1.2750. Regarding DXY, our research indicated that the Dollar Index was expected to rise from its range of 100.50 to 100.80, a strong support zone. Because they are inversely connected, when the Dollar Index rises, the GBP/USD decreases, and vice versa. Thus, the increase in DXY was a big contributor to the GBP/USD fall.

The GBP/USD pair could fall further in the 1.2400 and 1.2100 zones. DXY may rise to 1.0350 and 1.0400, respectively, because the GBP/USD is inversely proportionate to the Dollar Index, as previously stated.

Please check the weekly chart for GBP/USD support and resistance levels. All levels are in the spot chart.