-
GBP/USD hits a new two-month low as Trump wins White House.
-
Short-term outlook remains bearish; focus on 200-SMA for potential support.
-
Bank of England, Fed announce their rate decisions today.
GBPUSD took a sharp dive to a two-month low of 1.2833 on Tuesday as the return of Trumponomics gave fresh impetus to the greenback.
On Wednesday, the 50% Fibonacci retracement level of the April-September rally came to support the market ahead of the BoE and Fed rate decisions, but with the price failing to hold above the ascending trendline from September 2022 and struggling to push past 1.3000 in recent days, the downside risks remain in play.
That said, the 200-day simple moving average (SMA), which triggered the rally to a 2½-year high of 1.3428 in August, is at a short distance near 1.2800. This could act as a potential rebound point if the bulls can manage a reversal. Plus, with the RSI and MACD staying in bearish territory for over a month, some traders might feel that the recent downfall has been overdone.
For the bulls to gain some power, they will initially need to clear the 1.2950 zone and then take out the 1.3000-1.3040 range. If that happens, the 50-day SMA near 1.3100 could be the next hurdle. Breaking above 1.3100 would violate the current bearish trend and set up a move toward 1.3265, unless resistance around 1.3170 holds things back.
On the flip side, if the price falls below the 1.2800 area, support could come in around the 61.8% Fibonacci level of 1.2730, or near the August low at 1.2663. A deeper decline could find support around 1.2565.
To sum up, GBPUSD remains in a bearish trend in the short-term picture, with the 200-day SMA at 1.2800 marking a key level to watch. For a potential shift to the upside, the pair needs to push past 1.3100 and hold above it. Otherwise, further downside could be in the cards.
Forex trading and trading in other leveraged products involves a significant level of risk and is not suitable for all investors.
Recommended Content
Editors’ Picks
AUD/USD holds steady near 0.6250 ahead of RBA Minutes
The AUD/USD pair trades on a flat note around 0.6250 during the early Asian session on Monday. Traders brace for the Reserve Bank of Australia Minutes released on Tuesday for some insight into the interest rate outlook.
USD/JPY consolidates around 156.50 area; bullish bias remains
USD/JPY holds steady around the mid-156.00s at the start of a new week and for now, seems to have stalled a modest pullback from the 158.00 neighborhood, or over a five-month top touched on Friday. Doubts over when the BoJ could hike rates again and a positive risk tone undermine the safe-haven JPY.
Gold price bulls seem non-committed around $2,620 amid mixed cues
Gold price struggles to capitalize on last week's goodish bounce from a one-month low and oscillates in a range during the Asian session on Monday. Geopolitical risks and trade war fears support the safe-haven XAU/USD. Meanwhile, the Fed's hawkish shift acts as a tailwind for the elevated US bond yields and a bullish USD, capping the non-yielding yellow metal.
Week ahead: No festive cheer for the markets after hawkish Fed
US and Japanese data in focus as markets wind down for Christmas. Gold and stocks bruised by Fed, but can the US dollar extend its gains? Risk of volatility amid thin trading and Treasury auctions.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.