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British Pound Analysis: GBP/USD Drops to Support as US Dollar Firms

British Pound Analysis: GBP/USD Drops to Support as US Dollar Firms

Tammy Da Costa, Analyst

UK British Pound Technical Outlook: Neutral

  • GBP/USD drops back to support – Strong NFP report drives USD strength
  • British Pound loses grip after running into resistance at 1.12
  • Break below psychological support threatens potential recovery

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GBP/USD Technical Resistance Drives a Move Back Towards 1.100

GBP/USD is currently testing another critical zone which continues to provide resistance at the key psychological level of 1.1500.

After recently reaching a fresh all-time low of 1.0354 last month, a rebound off 1.052 (the 1985 low) drove price action higher before reaching a new barrier of resistance at 1.1414.

With resistance forming at the March 2020 low, the formation of a long-wick candle on the weekly chart is suggestive of a strong rebound towards prior resistance turned support at 1.084.

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GBP/USD Weekly Chart

Chart, line chart  Description automatically generated

Chart prepared by Tammy Da Costa using TradingView

As the weekly CCI (commodity channel index) attempts to exit oversold territory, the 23.6% Fibonacci level of the 2021 – 2022 move has limited the upside move at 1.1274, bringing the 20-day MA (moving average) into play at 1.1235.

GBP/USD Daily Chart

Chart, line chart  Description automatically generated

Chart prepared by Tammy Da Costa using TradingView

GBP/USD Technical Levels

For a revival of the uptrend, a hold above 1.100 and above 1.1274 could see a retest of 1.1414 with next big resistance at 1.1843 (the 38.2% Fib of the 2021 – 2022 move).

On the contrary, a drop below 1.11 could pave the way for 1.084 with the next barrier of support forming at 1.0354.

--- Written by Tammy Da Costa, Analyst for DailyFX.com

Contact and follow Tammy on Twitter: @Tams707

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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