GBP/USD Undergoes Consolidation; BoE’s Stance and Technical Indicators Shed Light
In Thursday’s Asian trading window, the GBP/USD pair exhibited stabilization around the 1.2500 mark, following its recent depreciative trajectory. Concurrently, the US Dollar Index (DXY), an esteemed benchmark gauging the USD’s strength against a basket of six major currencies, sustains a position close to 104.80.
This positioning comes after it receded from its peak value in March. The dollar’s robustness is underscored by the optimistic figures from the US ISM Services PMI, which not only surpassed forecasts but also attained a commendable six-month zenith at 54.5 in August.
Conversely, the British Pound (GBP) encountered headwinds following the Bank of England (BoE) Governor, Andrew Bailey’s dovish commentary. His observation intimated a nearing cessation of the BoE’s interest rate hiking phase.
From a technical vantage point, the GBP/USD currently operates beneath the 50- and 100-hour Exponential Moving Averages (EMAs), both exhibiting a downward inclination on the hourly chart.
This pattern augments the possibility of a further decline. Substantiating this outlook, the Relative Strength Index (RSI) situates itself below the neutral 50 mark, indicative of bearish momentum and implying a probable continuance of seller dominance in the proximate future.
In terms of potential downside movement, a sustained breach below the Bollinger Band’s base at 1.2465 could subsequently target levels of 1.2440 (May 12’s low), 1.2390 (June 6’s low), and ultimately, the 1.2350 point (a trough from May 31).
Conversely, any bullish undertakings will confront immediate resistance at the Bollinger Band’s median line, positioned at 1.2515. Following that, the 50-hour EMA offers resistance at 1.2545. A formidable resistance cluster emerges between 1.2565 and 1.2575, delineated by the Bollinger Band’s upper limit and the 100-hour EMA. Beyond this, GBP/USD bulls would need to navigate the pivotal 1.2600 mark, recognized as a significant psychological threshold.
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