The currency exchange market has been volatile recently, with the GBP/USD pair showing significant movement. The pair has been heading toward the 1.2000 mark, despite experiencing several losses in the previous week. Currently, the exchange rate stands at 1.2030, reflecting the impact of recent events and decisions made by central banks.
The downbeat of the pair justifies The Bank of England’s (BOE) 50-point interest rates hikes, taking pointers from the dovish 25% hike from the Federal Reserve (FED). This move by the BOE indicates the current economic conditions and the need for a stable exchange rate.
Technical Analysis of GBP/USD
To completely understand the GBP/USD pair’s performance, it’s useful to look at several key metrics. First, the 20-day Simple Moving Average (SMA) is at 1.2289, the 50-day SMA is at 1.219, the 100-day SMA is at 1.1804, and the 200-day SMA is at 1.1955. These moving averages help smooth out exchange rate fluctuations and clarify the pair’s overall trend.
Several key levels have been encountered in the pair’s recent movements, including the previous daily high of 1.2266 and the previous weekly low of 1.205. Additionally, the previous monthly high was at 1.2448, and the previous monthly low was at 1.1841. These key levels can provide important resistance points for the pair.
The GBP/USD pair is experiencing a bearish trend, as indicated by a recent breakdown of a four-month-old ascending trend line around the 1.2145 level. This downward move has directed the bears towards the 200-day moving average (DMA) support located around 1.1950. The latest data shows that the pair’s last price was 1.2039, with a daily change of -0.0011 or -0.09%. The daily open was at 1.205.
The pair also faces some key pivot points in its current market trend. According to the daily Fibonacci analysis, the 38.2% level is at 1.2132, while the 61.8% level stands at 1.2183. On the support side, the daily pivot point S1 is at 1.1979, with S2 at 1.1907 and S3 at 1.1763.
On the resistance side, the daily pivot point R1 is at 1.2194, R2 is at 1.2337, and R3 is at 1.2409. Therefore, these key levels can play an important role in determining the direction of the pair’s future movement.
The bearish trend of the GBP/USD pair has been reinforced by the recent strong jobs and activity data, which showed non-farm payrolls surpassing expectations and rising by a substantial 517k, compared to the predicted 260k.
Furthermore, unemployment declined to 3.3% from the previously recorded 3.5%. These positive developments in the labor market have significant implications for the economy and further bolster the bearish trend of the currency pair.
UK Data Dump and Rise in US Treasury Yields
This week, market participants will closely watch the release of the UK’s fourth-quarter GDP data, which is expected to provide insight into the country’s economic performance. The anticipation of this data release has caused heightened volatility in the currency markets, especially as the BOE is set to make new comments this week.
The recent rise in US Treasury yields by 3.6% – the largest weekly jump since late 2022 – has added to the volatility, with market participants closely watching for further developments. In addition, this increase in Treasury yields could impact the GBP/USD exchange rate, depending on how the market reacts to the economic data releases.