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British Pound (GBP) Price Outlook: GBP/USD Searches for Support After Fall

British Pound (GBP) Price Outlook: GBP/USD Searches for Support After Fall

Martin Essex, MSTA, Analyst

GBP price, news and analysis:

  • A sharp rise in the US Dollar has hit GBP/USD hard, and more losses now seem likely.
  • After a break below the lower trendline of a downward-sloping channel in place on the charts since late July, the key question for traders is where support now lies.

GBP/USD heading lower

GBP/USD has made a clean break below support from a trendline joining the lower lows of a downward-sloping channel in place on the charts since July 30. Now – perhaps after a small bounce – further losses look likely.

GBP/USD Price Chart, One Hour Timeframe (July 29 – August 19, 2021)

British Pound (GBP) Price Outlook: GBP/USD Searches for Support After Fall

Source: IG (You can click on it for a larger image)

Note from the hourly chart above that the relative strength index (RSI) is only just at the 30 level that suggests the market has been oversold, so last month’s lows at 1.3591 on July 21 and 1.3572 the previous day look like reasonable targets for the bears. On the upside the trendline mentioned earlier, currently at 1.3737, will now provide resistance.

Note too that the US Dollar is still benefiting from the spread of the Delta variant of Covid-19, China’s corporate crackdown and the turmoil in Afghanistan. In addition, the minutes of the July meeting of the Federal Open Market Committee, released Wednesday, pointed to agreement to slow its pace of bond buying later this year. More detail is expected at the August 26-28 meeting of the Jackson Hole economic policy symposium.

Elsewhere, with little on the UK economic calendar this session, the next data to look out for are Friday’s GfK measure of UK consumer confidence followed by July public sector borrowing and retail sales.

--- Written by Martin Essex, Analyst

Feel free to contact me on Twitter @MartinSEssex

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