[ad_1]
Technical support from the 50-Day EMA is likely to come into play, and resistance near the 1.27 level should be monitored
- The GBP/USD exhibited slight positivity during Friday’s trading session, attempting to stabilize following a significant sell-off the previous day.
- Despite the negative sentiment conveyed by Thursday’s candlestick, it has not altered the prevailing trend, nor do I believe that the market is ready to make a decisive shift at this point.
- Instead, buyers are likely to continue stepping in to capitalize on potential value during dips, maintaining the current market dynamics.
It is worth noting that the 50-Day Exponential Moving Average (EMA) resides near the 1.24 level and is ascending. As a result, it is expected to provide technical support in the event of a pullback or once the price approaches that range. However, it is essential to highlight that the 1.27 area previously acted as resistance, suggesting a potential repeat if the price nears that level. Nevertheless, it does not necessarily imply that a breakout above that resistance cannot occur.
Presently, Great Britain is grappling with higher inflation compared to many other nations, potentially leading the Bank of England to maintain a tighter monetary policy for a more extended period than its counterparts. The British pound has been one of the stronger performing currencies this year, and although Thursday’s candlestick was decidedly negative, a single day’s movement is unlikely to reverse the trend in a currency pair unless accompanied by exceptionally disruptive news.
Keeping this in mind, I maintain a “buy on the dips” stance for this currency pair, based on the information available. Only if the market breaks below the 1.2350 level would the sustainability of the uptrend come into question. Even in that scenario, there are highly probable support areas beneath that would attract buyers. If you are considering purchasing the US dollar, you may find greater success against other currencies, as the British pound has exhibited considerable strength for a significant portion of the past several months. However, should the market successfully break above the 1.27 level, it is plausible that the British pound could climb as high as 1.30 in the coming weeks. Nonetheless, expect some choppiness along the way as the market navigates this potential ascent.
TL;DR: the British pound has displayed signs of stabilization following Thursday’s sell-off. The established trend remains intact, with buyers expected to seize opportunities during price dips. Technical support from the 50-Day EMA is likely to come into play, and resistance near the 1.27 level should be monitored. The Bank of England’s commitment to a tighter monetary policy due to higher inflation contributes to the British pound’s strength. However, the market’s behavior on Thursday does not indicate a significant reversal without significant disruptive news. Traders are advised to focus on buying opportunities, keeping a close eye on key support and resistance levels.
Ready to trade our daily Forex analysis? We’ve made this UK forex brokers list for you to check out.
[ad_2]