GBP/USD Analysis

• 31 January, 2024 Ruchit Thakur

GBP/USD Analysis

Evening update: The GBP/USD is currently trading at 1.2700. Will it bounce or continue to fall ?

The GBP/USD pair is currently trading below the 200 DMA on the weekly chart, having encountered strong resistance in the 1.2800-1.2850 range. Because GBP/USD is weighted at 12% in DXY, the primary cause of the loss in GBP/USD was a substantial increase in the Dollar Index. As we mentioned in a previous post, the Dollar Index was trading with a strong support level of 100.50-100.80. Every increase on the chart represents an opportunity to sell GBP/USD.

• After a strong slide, the GBP/USD pair fell below the 200 DMA.
• The chart shows that the 200 DMA and trendline have forcefully rejected the GBP/USD pair. It could go into the 1.2400 and 1.2100 zones, respectively.
• The 200 DMA on the weekly chart is at 1.2850, where it converges with trendline resistance. Given that any price increase could be met with large supply, we may expect the GBP/USD price to fall further. 

Please see the above chart for the GBP/USD resistance and movement near the weekly 200 DMA. The trendline resistance was positioned between 1.2800 and 1.2850, and GBP/USD fell to around 1.2750. According to our study, the Dollar Index is predicted to rise from its current range of 100.50 to 100.80, which is a strong support zone. Because they are inversely connected, when the Dollar Index rises, the GBP/USD falls, and vice versa. As a result, the increase in DXY was a significant driver to the GBP/USD decline.

The GBP/USD pair may fall further in the 1.2400 and 1.2100 zones. The DXY may rise to 1.0420 and 1.0450, respectively, because the GBP/USD is inversely proportional to the Dollar Index, as previously mentioned.

Please refer to the weekly chart for GBP/USD support and resistance levels. The spot chart includes all levels.