GBP/USD Analysis

• 28 February, 2024 Ruchit Thakur

GBP/USD Analysis

Evening update: GBP/USD is currently trading at 1.2650. Will it bounce or continue to fall?

The GBP/USD pair is currently trading below the 200 DMA on the weekly chart, having encountered major resistance in the 1.2800-1.2850 range. Because GBP/USD is weighted at 12% in DXY, the primary reason for the GBP/USD loss was a substantial increase in the Dollar Index. As we mentioned in a recent essay, the Dollar Index was trading close to its strong support level of 100.50-100.80. Every rise on the chart represents a chance to sell GBP/USD.

• Following a strong fall, 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 may enter the 1.2400 and 1.2100 zones, respectively.
• On the weekly chart, the 200-day moving average (DMA) is around 1.2850, meeting trendline resistance. Given that any price increase could be met by a vast supply, we should expect the GBP/USD price to fall further. 

Please see the preceding chart for GBP/USD resistance and movement around the weekly 200 DMA. The trendline resistance ranged between 1.2800 and 1.2850, and GBP/USD fell to around 1.2550. According to our estimate, the Dollar Index is likely to rise from its current range of 100.50 to 100.80, indicating a strong support zone. Because they are inversely related, when the Dollar Index rises, the GBP/USD falls, and vice versa. As a result, the spike in DXY had a significant impact on the GBP/USD decrease.

The GBP/USD pair could fall further between 1.2400 and 1.2100. The DXY may rise to 105.50 and 107.00, respectively, due to the previously stated inverse relationship between the GBP/USD and the Dollar Index.

Please refer to the weekly chart for GBP/USD support and resistance levels. The spot chart represents every level.