GBP/USD Talking Points
- GBP/USD slides from major resistance as bullish momentum subsides.
- Pound Dollar faces technical headwinds in anticipation of next week’s event risk.
- FOMC and BoE (Bank of England) brace for further rate hikes with any surprises adding as a potential catalyst for price action.
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![How to Trade GBP/USD](https://a.c-dn.net/b/3bQXlG/500x707HowtoTrade-GBPUSD.png)
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GBP/USD Technical Analysis
The British Pound is starting to show signs of weakness against its Dollar counterpart as upside momentum subsides. With bulls driving GBP/USD into a wall of resistance around 1.230, the midpoint of the 2021 – 2022 remains key for the imminent move.
After reaching a high of 1.2345 earlier this week, failure to hold above this level allowed bears to step in, driving prices lower. As price action falls into a narrow range of technical significance, the 200-day MA (moving average) is providing support at 1.212.
![](https://a.c-dn.net/b/3H8pFp/GBPUSD+Daily.png)
Chart prepared by Tammy Da Costa using TradingView
With the major currency pair currently trading around the key psychological level of 1.220, a break of current support or resistance could drive the short-term move.
While the weekly chart illustrates how the 1.23 handle has provided support and resistance for historical moves, the 50-week MA (moving average) rests just above, around 1.240.
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GBP/USD Weekly Chart
![](https://a.c-dn.net/b/0tIav4/GBPUSD+Weekly.png)
Chart prepared by Tammy Da Costa using TradingView
For bulls to continue to drive a broader recovery, a break of 1.23 and 1.24 could see prices rising back to the next key psychological level of 1.250.
However, if prices fall below 1.220, additional selling pressure and a move below 1.212 could fuel downside momentum back towards 1.176.
GBP/USD Client Sentiment
![Graphical user interface, chart Description automatically generated](https://a.c-dn.net/b/0bOhbp/image3.png)
IG client sentiment provides real-time data on retail trader positioning which could highlight potential extremes in crowd behavior. At the time of writing, retail trader data shows 44.57% of traders are net-long with the ratio of traders short to long at 1.24 to 1.
We typically take a contrarian view to crowd sentiment, but the fact traders are less net-short from last week suggests GBP/USD gives us a further mixed trading bias.
Change in | Longs | Shorts | OI |
Daily | 3% | -7% | -3% |
Weekly | 4% | -10% | -5% |
--- Written by Tammy Da Costa, Analyst for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707