The GBP/USD pair continues to experience downward pressure, currently trading just above the four-week low of 1.2487. Despite breaking a three-day streak of losses and moving to around 1.2640 early in the European trading session, the overall market trend remains bearish. The analysis indicates that the pair is confined within a descending channel, with significant resistance at the nine-day Exponential Moving Average (EMA) located at 1.2684.
The bearish sentiment is further supported by the 14-day Relative Strength Index (RSI), which remains below the neutral 50 level. Such positioning of the RSI suggests that momentum is skewed negatively, indicating that traders may expect further weakness in the GBP against the USD in the near term. The inability of the pair to climb above the nine- and 14-day EMAs emphasizes a lack of immediate bullish momentum.
As the GBP/USD approaches the previous low of 1.2487, there is an increased chance of testing lower support levels. If the pair breaks below this zone, it could reinforce the current bearish trend, possibly leading to a decline toward the lower boundary of the descending channel. The yearly low of 1.2299, reached in April, may come into focus if further downward movement occurs.
Conversely, should the pair manage to surpass the upper boundary of the descending channel at 1.2684, it could signal a shift in sentiment. Such a breakout might open the way for an upward movement toward the five-week high of 1.2811, observed earlier in December, providing a potential turning point for the currency pair.
