GBP/USD Will this be the turning week?

24 Eyl 2023

The GBP/USD pair has experienced its third consecutive weekly decline, continuing the bearish trend that began in mid-July. During this period, the exchange rate has dropped from around 1.3100 to 1.2232, reaching the lowest level since March last Friday. The combination of an accommodative Bank of England and a decisive pause from the Federal Reserve has paved the way for further weakness in the pair. The Bank of England attracted attention by not raising interest rates as expected, due to lower-than-expected inflation data. In the UK, inflation, measured by the Consumer Price Index, fell to 6.7% on an annual basis in August, compared to 6.8% in July. This influenced the decision of the Monetary Policy Committee. In the current context, lower inflation could have a short-term negative impact on the pound but could be positive for the economy in the medium term. Recent economic data in the UK showed growth in the manufacturing sector but contraction in the services sector. The Federal Reserve kept interest rates unchanged, but many FOMC members see possible tightening before the end of the year. The pound approached the 200-day Simple Moving Average but remained below the support area at 1.2350. A potential shift from the bearish trend to a neutral position would require a recovery above the 20-day SMA at 1.2490 and the trendline at 1.2520. On the weekly chart, GBP/USD is approaching the 1.2200 level, near the 55-week SMA. This convergence could lead to a rebound, but it also warns of the potential for an accelerated bearish momentum if the pair drops significantly below this level. Technical indicators remain bearish, and even a modest recovery in the coming days is unlikely to change this configuration. The expectation is bullish as the price has experienced a false breakout of a swing low at the 1.2238 level. I will look for a long opportunity during the pre-opening of New York tomorrow. Comment and leave a like to support our work. Greetings and happy trading from Nicola, the CEO of Forex48 Trading Academy.