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GBPUSD Fragile as Downside is Tested

GBPUSD Fragile as Downside is Tested

Martin Essex, MSTA, Analyst

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.

Our trading forecasts for Q3 have just been published; you can find the GBP guide here.

And check out the IG Client Sentiment data to help you trade profitably.

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)

Latest GBPUSD price chart.

Chart by IG

More to read: GBPUSD Price Analysis - Brexit White Paper Will Direct Sterling

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

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex

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

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