The GBP/USD currency pair remains solidly positioned beneath the 1.3000 level following a stagnant trading session on Tuesday. Technical analysts are closely monitoring the pair’s movement, particularly if it fails to convert the 1.2970 level into a resistance point. The current climate of risk aversion is likely to limit any potential recovery for the pair in the near term.
On Tuesday, the pair experienced a slight rise above 1.3000 during European trading hours but could not establish a firm footing, concluding the day with minimal changes. As of Wednesday morning, GBP/USD was trading within a narrow range below this critical threshold, and the technical indicators do not suggest an imminent recovery.
An empty economic calendar on Tuesday meant that market sentiment played a crucial role in GBP/USD ’s direction. U.S. stock indices faced challenges in gaining momentum, closing with slight variations, which helped bolster the U.S. Dollar against its competitors.
Looking ahead, the Governor of the Bank of England is scheduled to speak at an Institute of International Finance event. A dovish stance could emerge if the governor highlights ongoing disinflation and refrains from countering expectations of further interest rate cuts this year, likely leading to additional weakening of the Pound Sterling.
In the U.S., the only significant economic data release scheduled is for Existing Home Sales in September. Stock index futures in the U.S. were observed showing losses of around 0.2% to 0.3%, suggesting that a bearish trend on Wall Street could further support the U.S. Dollar.
From a technical perspective, GBP/USD is positioned within a descending channel that has been evident since late September, with the Relative Strength Index (RSI) on the 4-hour chart indicating a bearish bias. The 100-day Simple Moving Average (SMA) is providing strong support at 1.2970. If this level fails, potential bearish targets could include the 1.2930 mid-point of the channel and then the significant psychological level at 1.2900. On the upside, resistance levels are identified at 1.3000, followed by 1.3040 and 1.3100.
