GBP/USD Analysis

• 21 March, 2024 Ruchit Thakur

GBP/USD Analysis

Evening update: 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 faced significant resistance in the 1.2800-1.2850 zone. Because GBP/USD is weighted at 12% in DXY, the fundamental reason for the GBP/USD loss was a large increase in the Dollar Index. As we noted in a recent study, the Dollar Index was trading near its key support level of 100.50-100.80. Every uptick on the chart indicates an opportunity to sell GBP/USD.

• Following a sharp decline, the GBP/USD pair dipped below the 200 DMA.
• The chart illustrates that the 200 DMA and trendline have decisively rejected the GBP/USD pair. It might enter the 1.2400 and 1.2100 zones, respectively.
• The weekly chart shows the 200-day moving average (DMA) at 1.2850, signaling trendline resistance. Given that any price increase could be met by a substantial supply, we can expect the GBP/USD price to fall even more. 

Please refer to the prior chart for GBP/USD resistance and movement at the weekly 200 DMA. The trendline resistance was between 1.2800 and 1.2850, and GBP/USD dropped to roughly 1.2550. According to our estimates, the Dollar Index will rise from 100.50 to 100.80, indicating a solid support zone. Because they are inversely related, the GBP/USD declines when the Dollar Index increases, and vice versa. As a result, the DXY's surge had a substantial impact on the GBP/USD's decline.

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

Please see the weekly chart for GBP/USD support and resistance levels. The spot chart illustrates each level.