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GBPUSD Technical Analysis | USD weakness has helped Cable to rally
BY Janne Muta, M.Sc in Finance|November 20, 2023
GBPUSD Technical Analysis - GBPUSD rallied on Friday despite speculation of a potential peak in interest rates in the UK. . Even as lower inflation readings and signs of economic growth softening emerged, the GBP continued to strengthen against the dollar.
Friday's lower-than-expected UK retail sales numbers raised concerns about consumer sentiment with substantially lower than expected readings (-0.3% vs. +0.5 expected). At the same time UK GDP growth has been modest.
These factors are bearish for Sterling, but the move higher in GBPUSD was mainly driven by USD weakness. The dollar has been under pressure since the beginning of the month as traders and investors alike have been betting the Fed is now more likely to cut the rates than to continue the recent restrictive rate policy. Currently futures traders are pricing in four rate cuts for the next year.
Summary of This GBPUSD Technical Analysis Report:
- The weekly chart shows how GBPUSD has been moving steadily higher since it broke out of a bearish trend channel 3 weeks ago. The pair has been moving towards a market structure area between 1.2590 and 1.2621.
- GBPUSD has rallied nicely since our last analysis report. The market creates higher lows and higher highs, suggesting that the Bulls are in control of the market. The market has rallied over 2.6% since the USD weakness started on the 1st of November.
- The 8-hour chart shows how the latest higher swing low coincides with the 20-period moving average. Therefore, the bias is to the upside in both the daily and 8-hour timeframes, and we could see the buyers re-engaging with the market should the latest swing low get retested. Alternatively, in the event of the 1.2376 swing low support failing, we could see a move down to 1.2310.
Read the full GBPUSD technical analysis report below.
GBPUSD technical analysis
Weekly GBPUSD technical analysis
The weekly chart shows how GBPUSD has been moving steadily higher since it broke out of a bearish trend channel 3 weeks ago. The pair has been moving towards a market structure area between 1.2590 and 1.2621.
Currently, GBPUSD trying to push beyond the 20-period moving average, and the stochastic oscillator is moving close to the overbought area. Our GBPUSD technical analysis suggests that the market is bullish and could soon be testing the above-mentioned market structure area (1.2590 - 1.2621).
In the weekly chart, the market remains bullish above 1.2187. Below this level, we could see GBPUSD retesting the 1.2070 support level.
Daily GBPUSD technical analysis
GBPUSD has rallied nicely since our last analysis report. The market creates higher lows and higher highs, suggesting that the Bulls are in control of the market. The market has rallied over 2.6% since the USD weakness started on the 1st of November.
Traders following indicators in their GBPUSD technical analysis might have noticed how the 20-period moving average is crossing above the 50-period SMA. When a bullish signal like this happens after a major reversal in the market, it indicates that the market could have substantial upside potential.
The nearest key price levels levels
The nearest key support levels are at 1.2187 and 1.2376. In the case of the market retracing back to these levels, traders should monitor price action to see if it signals the bulls are willing to support the market again with their buying.
If the market is able to maintain the upside momentum, we could see a move to 1.2632. Alternatively, a move back down to the bull channel low at 1.2255 could be likely. This is where both the moving averages and the bull channel low are relatively closely aligned.
GBPUSD technical analysis, 8h chart
The 8-hour chart shows how the latest higher swing low coincides with the 20-period moving average. Therefore, the bias is to the upside in both the daily and 8-hour timeframes, and we could see the buyers re-engaging with the market should the latest swing low get retested.
Alternatively, in the event of the 1.2376 swing low support failing, we could see a move down to 1.2310. On the upside, the nearest technical resistance is created by the bull channel high at 1.2548. Should the market attract buyers above 1.2376, it could be likely that this nearest resistance gets tested relatively soon.
Client sentiment analysis
TIOmarkets' clients are bearish with 83% holding a short position and 17% holding long positions in GBPUSD.
Please remember that the retail trader client sentiment is a contrarian indicator as most of the retail traders are on average betting against the market trends. This is why, experienced traders tend to trade against the retail client sentiment. You can follow the TIOmarkets client sentiment live on our Forex dashboard.
The next key risk events impacting this market:
GBP - BOE Gov Bailey Speaks
GBP - Monetary Policy Report Hearings
USD - Existing Home Sales
USD - FOMC Meeting Minutes
GBP - Autumn Forecast Statement
USD - Unemployment Claims
USD - Core Durable Goods Orders m/m
USD - Durable Goods Orders m/m
USD - Revised UoM Consumer Sentiment
GBP - Flash Manufacturing PMI
GBP - Flash Services PMI
USD - Flash Manufacturing PMI
USD - Flash Services PMI
Potential GBPUSD Market Moves
Our GBPUSD technical analysis suggests that the market could likely move higher from the 1.2200 support level. Above 1.2187, look for a move to the 1.2428 resistance level.
Alternatively, if the market fails to attract buyers, we could see it trading down to 1.2070 again if the 1.2187 level doesn't hold.
How would you trade the GBPUSD today?
I hope this fundamental and technical GBPUSD analysis helps you to make better informed trading decisions. Check the latest market analysis for other instruments and subscribe to receive them in your inbox as soon as they are published
While research has been undertaken to compile the above content, it remains an informational and educational piece only. None of the content provided constitutes any form of investment advice.
TIO Markets UK Limited is a company registered in England and Wales under company number 06592025 and is authorised and regulated by the Financial Conduct Authority FRN: 488900
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. All trading involves risk.
DISCLAIMER: TIO Markets offers an exclusively execution-only service. The views expressed are for information purposes only. None of the content provided constitutes any form of investment advice. The comments are made available purely for educational and marketing purposes and do NOT constitute advice or investment recommendation (and should not be considered as such) and do not in any way constitute an invitation to acquire any financial instrument or product. TIOmarkets and its affiliates and consultants are not liable for any damages that may be caused by individual comments or statements by TIOmarkets analysis and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his/her investment decisions. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances, or needs. The content has not been prepared in accordance with any legal requirements for financial analysis and must, therefore, be viewed by the reader as marketing information. TIOmarkets prohibits duplication or publication without explicit approval.
Janne Muta holds an M.Sc in finance and has over 20 years experience in analysing and trading the financial markets.
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