GBP/USD PRICE OUTLOOK: POUND STERLING SLIDES AGAINST US DOLLAR TO TEST MAJOR TECHNICAL SUPPORT LEVEL
- GBP/USD price action has drifted 350-pips lower so far this month
- Spot GBP/USD currently tests a critical technical support level near the 1.2200 price
- The Pound Sterling may remain under pressure as the US Dollar climbs
GBP/USD prices have fallen roughly 3% since last month. Pound Sterling selling pressure over the last two weeks, accompanied by a return of US Dollar strength, has caused GBP/USD to drop to April lows.
| Change in | Longs | Shorts | OI |
| Daily | 5% | -15% | -7% |
| Weekly | -10% | 10% | -1% |
GBP/USD PRICE CHART: DAILY TIME FRAME (21 FEBRUARY TO 14 MAY 2020)
Recent downside in spot GBP/USD price action reiterates the rough trading range etched out by the cable roughly between the 1.2200-1.2600 zone. While the Pound-Dollar oscillates back and forth between these two major technical support and resistance levels, there is the outstanding risk of a possible breakdown lower.
GBP/USD declines have accelerated pace over the last few trading sessions and is illustrated by bearish divergence on the MACD indicator. Also, the British Pound remains threatened by lingering Brexit uncertainty as UK-EU negotiators refuse to budge and find common ground. On another note, the US Dollar has potential to extend its recent stretch of gains post-Powell pushback on negative interest rates and with FX volatility on the rise.
-- Written by Rich Dvorak, Analyst for DailyFX.com
Connect with @RichDvorakFX on Twitter for real-time market insight
