GBP/USD Recuperates Half of the Losses as it Bounces Off the 50 SMA Again

GBP/USD

Skerdian Meta•Tuesday, December 31, 2019•1 min read

The 50 SMA has turned from resistance into support

[[GBP/USD]] turned pretty bullish in October after the general elections were announced in the UK. Conservatives were poised to gain a majority in the British Parliament, which would make the political scene clearer in Britain. Tories did win a large majority earlier this month and GBP/USD surged more than 500 pips after that.

But, the optimism didn’t last long, once traders realized that the UK is heading out of the EU. A trade deal will be hard to reach within a year when the UK is scheduled to get out of the EU, which means a hard Brexit. So, if they can’t reach a trade deal, the Brexit deal is useless.

As a result, GBP/USD declined more than 600 pips in the following two weeks and during that time the 50 SMA (yellow) turned into resistance, pushing the price lower. The decline stopped at 1.29 though and the price has been bullish since then. The USD is going through a phase of weakness ahead of the new year, which is the reason this pair has been bullish.

The 50 SMA has turned from resistance into support and it is pushing the price higher on the H1 chart. Earlier today, we saw a small pullback down to that moving average and GBP/USD bounced off it once again. Now this pair is around 100 pips higher just today and 300 pips in total, which means that GBP/USD has recuperated almost half the losses. So, buyers are in control here as well, but I’m not sure it will last once we get into 2020.

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.