GBPUSD Fragile as Downside is Tested
GBP price, news and analysis:
- Attention in the UK is on the publication of the government’s Brexit plans and a visit by US President Donald Trump.
- However, from a technical perspective, GBPUSD is at risk of breaking lower, with 1.30 in sight.
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Downside risk for GBPUSD
GBPUSD is at a critical point technically and a move down to the 1.30 level is looking increasingly likely as the UK government issues its long-awaited Brexit plans in the form of a “White Paper” and a visit by US President Donald Trump looks set to be accompanied by widespread demonstrations.
The pair has been trending lower since April 17, when it hit a high of 1.4377. That decline reversed on June 28, when it hit a low of 1.3049 and it has been rallying since then. However, the last few sessions have seen weakness re-emerge.
GBPUSD Price Chart, Daily Timeframe (April 4 – July 12, 2018)
As the chart above shows, GBPUSD is poised to break a rising trendline that connects the recent higher lows. If it does, there is little support before 1.30, where two longer-term trendlines converge. The June 28 low of 1.3049 lies just above that but the 1.30 round number looks more important as a medium-target.
If this proves wrong and a rally takes place, rises back to the 23.6% Fibonacci retracement of the slide from the April high, at 1.3360, the July 9 high at 1.3363 and trendline resistance at 1.34 is possible but a slide lower looks more likely.
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--- Written by Martin Essex, Analyst and Editor
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.