Is GBP/USD poised for a rebound?

21 Eki 2023

In this update on GBP/USD, the currency pair initially dropped to the 1.2100 level due to disappointing economic data from the UK. However, it managed to recover to around 1.2150. Market sentiment remains negative, with investors focused on news related to the conflict between Israel and Hamas. The Relative Strength Index (RSI) indicator on the 4-hour chart has stayed below 50, indicating a bearish outlook. If GBP/USD closes below 1.2100 on the 4-hour chart, sellers might become more active. In that case, the next downside targets could be 1.2050 and 1.2000.

On the upside, key resistance levels include the 20-period Simple Moving Average (SMA) at 1.2150, followed by 1.2180 and 1.2200.

The short-term technical outlook suggests that the bearish bias remains in place. Furthermore, disappointing retail sales data in the UK and comments from the Governor of the Bank of England, Andrew Bailey, have contributed to the weakness of the pound. Meanwhile, the US dollar has experienced some initial weakness but could receive support due to concerns related to the Israel-Hamas conflict affecting market sentiment. I also want to highlight a crucial point where the price is, precisely at the intersection of two trendlines at the 1.2161 level, and from here, I expect an uptrend with a target of 1.23. Personally, I will look for a long entry if I find a good setup on the 15-minute chart with some Moving Average Convergence Divergence (MACD) signals. Let me know what you think. Happy trading to everyone from Nicola, the CEO of Forex48 Trading Academy.