GBP/USD Declines Toward 1.2350 Amid Stronger USD
31 May 2023
GBP/USD continues to decline towards 1.2350 despite a stronger US dollar.
FUNDAMENTAL OVERVIEW
In the European session, the GBP/USD is continuing to decline towards 1.2350. Amid concerns about China’s economic development and ahead of the US House vote on the debt accord, markets remain nervous. Mester, a hawkish Fed official, supports the current US dollar increase. With more Fed speak.
After managing to close in positive territory above this level on Tuesday, the GBP/USD pair has now reversed its direction and fallen below 1.2400 early on Wednesday. The short-term technical picture is negative, and a break of the 1.2350 support level could signal the start of a protracted decline.
The risk-positive market environment on Tuesday made it difficult for the US Dollar (USD) to find demand in the early going and aided GBP/USD in staging a significant recovery. However, markets became wary in the late American session as the measure to postpone the debt ceiling narrowly passed the House Rules Committee.
As the bill goes to a vote in the House, market participants may be holding off on committing to a risk surge as US stock index futures are down between 0.2% and 0.3% as of early Wednesday. The debt-limit agreement has drawn criticism from several Republicans, and investors doubt that the bill will be swiftly passed.
GBP/USD is probably going to find it challenging to reverse its daily decline if safe-haven flows rule the financial markets in the afternoon. On the other hand, a favorable movement in market sentiment would support the USD and aid the pair in containing its losses.
GBP/USD TECHNICAL ANALYSIS DAILY CHART:
Technical Overview
GBP/USD is trading in the down channel.
GBP/USD is currently trading below 20&50 SMA.
RSI is in buying zone which suggests bullishness and Stochastic is suggesting no trend.
GBP/USD resistance is at 1.23974 & its immediate support level is 1.23562
HOW TO TRADE GBP/USD
Following a strong advance, the GBP/USD is now retracing and going downward. Currently, the price is trading at a key support level; if this level is broken, the price is likely to move lower.