The GBP/USD pair dipped to 1.2100 in early European trading but found support just above this level. The US dollar maintained its strength after Tuesday's rally, preventing the pair from gaining momentum.
The Relative Strength Index (RSI) on the 4-hour chart has dropped below 50, indicating a bearish trend. Meanwhile, the most recent 4-hour candles closed below both the 100-period and 50-period Simple Moving Averages (SMA), reflecting a downward bias.
On the other hand, 1.2100 is considered a key support level. If buyers can't defend this level, the pair may experience further losses towards 1.2050, which marks the most recent low point of the current downtrend.
For GBP/USD to shift towards a bullish outlook, it needs to surpass the resistance zone at 1.2190-1.2200, where the 100-period SMA and the 23.6% Fibonacci retracement level meet. In this scenario, 1.2250 (200-period SMA) and 1.2300 (38.2% Fibonacci retracement) could be seen as the next resistance levels.
After a sharp decline on Tuesday, GBP/USD rose to 1.2200 early on Wednesday. However, market caution has hindered the pair's ability to extend the recovery.
Data from the US on Tuesday revealed that private sector business activity expanded slightly faster in early October than in September, with the S&P's global composite PMI improving from 50.2 to 51. Despite US Treasury bond yields continuing to decline, the US dollar benefited from the optimistic PMI index, putting pressure on GBP/USD.
On Wednesday morning in Europe, US equity futures were trading negatively, and the 10-year US Treasury bond yield remained slightly up, around 4.85%, helping the USD maintain its position.
In the latter part of the day, the New Home Sales data for September will be scrutinized for fresh momentum. Some Federal Reserve policymakers have expressed concerns about the adverse impact of high-interest rates on the housing market, so a significant decline in this data could immediately hurt the USD.
On Thursday, the US Bureau of Economic Analysis will release its first estimate of third-quarter Gross Domestic Product (GDP) growth.
The Relative Strength Index (RSI) on the 4-hour chart has dropped below 50, indicating a bearish trend. Meanwhile, the most recent 4-hour candles closed below both the 100-period and 50-period Simple Moving Averages (SMA), reflecting a downward bias.
On the other hand, 1.2100 is considered a key support level. If buyers can't defend this level, the pair may experience further losses towards 1.2050, which marks the most recent low point of the current downtrend.
For GBP/USD to shift towards a bullish outlook, it needs to surpass the resistance zone at 1.2190-1.2200, where the 100-period SMA and the 23.6% Fibonacci retracement level meet. In this scenario, 1.2250 (200-period SMA) and 1.2300 (38.2% Fibonacci retracement) could be seen as the next resistance levels.
After a sharp decline on Tuesday, GBP/USD rose to 1.2200 early on Wednesday. However, market caution has hindered the pair's ability to extend the recovery.
Data from the US on Tuesday revealed that private sector business activity expanded slightly faster in early October than in September, with the S&P's global composite PMI improving from 50.2 to 51. Despite US Treasury bond yields continuing to decline, the US dollar benefited from the optimistic PMI index, putting pressure on GBP/USD.
On Wednesday morning in Europe, US equity futures were trading negatively, and the 10-year US Treasury bond yield remained slightly up, around 4.85%, helping the USD maintain its position.
In the latter part of the day, the New Home Sales data for September will be scrutinized for fresh momentum. Some Federal Reserve policymakers have expressed concerns about the adverse impact of high-interest rates on the housing market, so a significant decline in this data could immediately hurt the USD.
On Thursday, the US Bureau of Economic Analysis will release its first estimate of third-quarter Gross Domestic Product (GDP) growth.
