GBP/USD Pair Shows Limited Movement as US Dollar Remains Uncertain

In the early European session, the GBP/USD pair is experiencing a lack of clear direction as it hovers above 1.2480.

Arslan Butt•Wednesday, May 17, 2023•1 min read

In the early European session, the GBP/USD pair is experiencing a lack of clear direction as it hovers above 1.2480. This lack of decisive movement follows the sideways movement of the US Dollar Index (DXY), which is struggling to break above the immediate resistance level of 102.70.

Despite discussions on the US debt-ceiling being postponed to later in the week, the foreign exchange market has not shown significant reaction. However, US President Joe Biden has assured that he will maintain daily communication with Speaker McCarthy to resolve negotiations.

Meanwhile, weak employment data from the United Kingdom has brought some relief to policymakers at the Bank of England (BoE). It is important to note that labor shortages and high food inflation have been key factors contributing to double-digit inflation in the UK.

The GBP/USD pair is currently near the lower portion of the Rising Channel chart pattern, which started from the low on April 03 at 1.2276. The upper portion of the chart pattern is formed from the high on April 04 at 1.2525. The upside movement of the Pound Sterling has been limited by the 20-period Exponential Moving Average (EMA).

The Relative Strength Index (RSI) (14) appears vulnerable within the range of 40.00-60.00. A sharp decline below 40.00 will signal downside momentum.

If the pair moves below the low on May 12 at 1.2440, it will break the Rising Channel pattern and expose the Cable to the low on April 21 at 1.2367, followed by the low on April 03 at 1.2276.

On the other hand, a recovery above the high on May 09 at 1.2640 will push the pair towards the round-level resistance at 1.2700 and the high on April 26, 2022, at 1.2772.

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ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.