Time Zone: GMT +2
Time Frame: 4 Hours (H4)
Fundamental Analysis:
The GBP/USD currency pair remains highly reactive to economic events from both the UK and the US. Today, key market-moving events include speeches from BOE Governor Andrew Bailey and BOE Chief Economist Huw Pill, which could provide insights into future monetary policy. Traders will be watching for any hawkish or dovish tones that could impact the British Pound’s direction. On the USD side, multiple Federal Reserve officials, including Mary Daly, Lorie Logan, and Michelle Bowman, are scheduled to speak. Their commentary on monetary policy, inflation trends, and labor market conditions will be crucial, especially given upcoming Non-Farm Payroll (NFP) data and unemployment figures. If the Fed officials express concerns about inflation persistence, it may strengthen the USD, leading to further downside for GBP-USD.
Price Action:
The GBP/USD pair is showing a bearish bias on the H4 timeframe. Out of the last 10 candlesticks, 8 have been bearish, reflecting strong selling pressure. The GBPUSD price recently tested the Bollinger Bands lower band, bounced toward the middle band near the 50% Fibonacci retracement level, but failed to break higher. The rejection at the middle band signals that sellers remain dominant, pushing the price back toward the 38.2% Fibonacci retracement level, which aligns with the lower Bollinger Band. A further break below this key area could send the cable toward the 23.6% Fibonacci level, indicating a continuation of the bearish trend.
Key Technical Indicators:
Bollinger Bands: The bands were wide over the past 24 hours, signaling high volatility, but have now started to tighten slightly, which could indicate an upcoming consolidation before another move. Price action suggests a bearish structure, as the price rejected the middle band and is now gravitating toward the lower band near the 38.2% Fibonacci level.
Relative Strength Index (RSI): The RSI is currently at 48.26, hovering near the neutral zone. This suggests that the market is neither oversold nor overbought, allowing room for further price action. However, the declining RSI trend reflects increasing bearish momentum.
Volumes: Recent volume spikes indicate strong market participation, particularly during downward moves. The last large bearish candle had a significant volume increase, suggesting that sellers are still in control. If volume remains high on further price drops, this would reinforce bearish momentum.
Support and Resistance Levels:
Support: Immediate support is at 1.2307 (38.2% Fibonacci retracement). A break below could push GBPUSD toward 1.2260 (23.6% Fibonacci and recent lows), reinforcing bearish momentum.
Resistance: The first resistance is 1.2480 – 1.2570 (61.8% Fibonacci and previous rejections). A breakout could challenge 1.2500 (psychological level and middle Bollinger Band), signaling a potential shift in momentum.
Conclusion and Consideration:
The GBP/USD pair on the H4 timeframe continues to exhibit bearish price action, struggling to hold above key support levels. The rejection at the middle Bollinger Band and 50% Fibonacci level suggests further downside potential, with the next key target at 1.2307 and possibly 1.2260 if selling pressure persists. Fundamentally, the BOE speeches today could introduce volatility, while Fed speakers may reinforce USD strength, further pressuring the GBP USD pair. Traders should closely monitor upcoming market events and consider risk management strategies in case of sudden cable price spikes.
Disclaimer: The analysis provided for GBP/USD is for informational purposes only and does not constitute investment advice. Traders are encouraged to perform their own analysis and research before making any trading decisions on GBPUSD. Market conditions can change quickly, so staying informed with the latest data is essential.
