April 25, 2024

GBP/USD Analysis: Pair Defends the Daily Line of Support But Maybe Not for So Long

US Dollar Loses More Grounds

The GBP/USD currency pair has tried to get back from a short-term drop it experiences under 1.3100 even though it is nearly unmoved during trading for the day while market players are cautious and waiting for a barrage of speeches from officials of the Bank of England on Monday.

The US dollar has been pulled off the elements enjoying the many days’ high against most of its other competing national currencies. It still holds part of the rebound it made in the past week, and it keeps the upside limited.

GBP/USD price chart. Source TradingView

In addition to that, the bond yields prolonged into the new week as the Treasury yield was going back in the direction of a three-year high point in the midst of the Federal Reserve’s hawkish tones.

One of the key events for cable traders this week would be the publication of the Federal Open Market Committee minutes which is scheduled for Wednesday. A statement from the Governor of the Bank of England, Andrew Bailey, is equally expected on Tuesday. When he was asked about the possibility of increasing interest rates in May last Monday, the Bank of England governor said that the situation is a very volatile one.

Pair Rises to Defend Trend Lines

Observing the daily chart of the GBP/USD currency pair, it seems the pair are desperately defending the important trend line support level at 1.3104. Any closing on the day under the latter would cause a new downward motion in the direction of last week’s low point at 1.3051.

The following target that is downward is sighted at the many weeks’ low point at 1.3000 which was reached in the middle of March. 

The GBP/USD currency pair closed the past week under the very critical and bearish 21-period daily moving average resistance point which is currently at 1.3129. There is a call for traders to be cautious of a dip in that area.

Furthermore, the relative strength index for the 14-day period is still slow under the middle line, which suggests that there is sufficient room for bearish traders to have enough latitude of expression.

Nevertheless, it is critical to have an acceptance over the 21-period daily moving average support zone that has become a resistance point. This is important to have so there can be a level of recovery that is sustained in the direction of the high point reached in the previous week at 1.3190.

Bulls will be prepared for the next phase of the high.  

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