GBP/USD Remains Bearish, With MAs Pushing it Lower
Skerdian Meta • 1 min read
GBP/USD surged in October, after Boris Johnson announced new elections in the UK. Markets got excited about the prospects of a majority win from the UK Conservatives, which would at least finally give a direction to the country, after three years of Brexit saga.
The Tories did win a comfortable majority in the British Parliament and this pair surged more than 5 cents higher. But, the optimism faded pretty fast, since we are now back to reality after the election joy. The US is still headed out of the EU and it will be difficult to reach a trade deal within a year. Besides that, the economy continues to weaken and the Bank of England will probably start easing the monetary policy soon, now that there’s some more political clarity.
As a result, GBP/USD turned bearish after the surge on election day. The price has slipped below moving averages, as shown on the H4 chart at the top of this article. The 20 SMA (grey) turned into resistance last week, but now this pair is facing the 300 SMA (purple). If that moving average goes, then we’re likely to see the downside pick up pace further.
The 50 SMA is pushing GBP/USD lower on the H1 chart
Switching to the H1 time-frame, we see that here it is the 50 SMA (yellow) which has been providing resistance during pullbacks higher, ending the retraces and pushing the price lower. There was a retrace earlier today, which ended at the 50 SMA again. That was a great selling opportunity, which we missed. But, we’ll follow the price action, in order to go short on another retrace higher.