The GBP/USD exchange rate has experienced a slight rally during Wednesday's trading session, touching the 50-Day EMA, which is right at the 1.21 level, an area that has been important more than once. However, touching this short-term barrier has allowed for more selling. The British pound has been an underperformer as of late, and as a result, it's not surprising to see that it has given up gains. The 50-Day EMA and the 200-Day EMA both offer resistance, but it's worth noting that the 1.20 level seems to be the beginning of significant support that drops down to the 1.1950 level.
GBP/USD Technical Outlook Today
- Looking at the chart, it appears that the massive selling at the beginning of the month has had a lasting effect on the market, as the British pound has been grinding lower in general since then, despite being very noisy.
- If the pound were to break down below the 1.1850 level, it would open up the possibility of a move down to the 1.15 level underneath.
- On the other hand, if the pound can break above the 200-Day EMA, it's likely that it will go looking for the 1.2250 level, possibly even the 1.24 level after that.
The significance of the 1.24 level is that the area formed a double top recently, and there appears to be a significant amount of resistance to the 1.25 level above. Breaking through the 1.25 level will be very difficult, and therefore, it's possible that the British pound may have reached its peak this cycle. It'll be interesting to see how the market behaves if the pound rallies towards that area. However, if both the Tuesday and Wednesday candlesticks are to be believed, it's very unlikely that we will see any sustainable rally in the pound as the US dollar continues to strengthen against almost everything.
In conclusion, the British pound has faced significant resistance from both the 50-Day EMA and the 200-Day EMA. The 1.20 level has provided some support but breaking below the 1.1850 level could open up the possibility of further downward movement. On the other hand, breaking above the 200-Day EMA could allow the pound to reach higher levels, but it will face significant resistance at the 1.24 and 1.25 levels. It remains to be seen whether the pound can sustain any rally in the face of a strengthening US dollar.
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