The GBP/USD currency pair is currently testing a seven-month low, trading at approximately 1.2487. The ongoing decline, which marks a third consecutive day of losses, is indicative of a prevailing bearish trend as the pair remains trapped within a descending channel. The analysis of the daily chart supports this bearish sentiment, especially as the 14-day Relative Strength Index (RSI) approaches the critical level of 30. A breach below this threshold may suggest an oversold condition, potentially paving the way for an upward correction in the near future.
In recent trading, the pair has remained near its recent low, recorded on November 22. If it breaks through this critical support level, the bearish momentum could increase significantly, possibly driving GBP/USD further down towards its yearly low of 1.2299 observed on April 22. Beyond that, the next support level is positioned at 1.2260, which aligns with the lower boundary of the descending channel.
On the resistance front, the GBP/USD pair might target the nine-day Exponential Moving Average (EMA) at 1.2606. A subsequent move beyond this level, along with the 14-day EMA at 1.2635, could signal a shift in sentiment. Such a breakthrough would challenge the existing bearish bias and open up the possibility of reaching higher ground. If momentum builds, the pair could move towards the recent five-week high of 1.2811 noted on December 6, marking a significant recovery from current levels. The coming days will be crucial in determining whether the pair can sustain these resistance challenges or if bearish trends will continue to dominate.
