GBP/USD Outlook Mired by Failure to Push Above 50-Day SMA
British Pound Talking Points
GBP/USD struggles to extend the series of lower highs and lows from earlier this week as it bounces back from a fresh monthly low (1.3791), but the negative slope in the 50-Day SMA (1.3884) casts a bearish outlook for the exchange rate amid the string of failed attempts to push back above the moving average.
Technical Forecast for British Pound: Bearish
Keep in mind, GBP/USD still tracks the broad range from the first half of 2021 as it reversed ahead of the February low (1.3566) during the previous month, and the failed attempt to close below the 1.3620 (78.6% retracement) region may push the exchange rate back towards the top of the yearly range as it attempts to retrace the decline from earlier this month.
Source: Trading View
However, GBP/USD is on the cusp of pushing below the 200-Day SMA (1.3769) for the second time this year as the rebound from the July low (1.3572) unravels, and another break below the moving average may indicate a potential shift in the broader trend as a double top formation takes shape in 2021.
With that said, lack of momentum to push back above the 50-Day SMA (1.3884) undermines the recent rebound in GBP/USD as the indicator develops a negative slope, but the exchange rate may continue to track the broad range from the first half of the year as it appears to have reversed course ahead of the February low (1.3566).
--- Written by David Song, Currency Strategist
Follow me on Twitter at @DavidJSong
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.