The GBP/USD currency pair appears poised for potential gains as it approaches a pivotal resistance level. Currently, the pair is testing the upper limit of a descending price channel, closely aligned with the nine-day Exponential Moving Average at a price level of 1.2691. The market remains relatively stable, trading around 1.2680 during the Asian trading session on Tuesday, following gains in the previous session.
Technical analysis of the daily chart indicates a possible shift towards bullish momentum, as GBP/USD aims to break free from its long-standing downward trend. Yet, it is important to note that the 14-day Relative Strength Index (RSI) continues to hover below the critical 50 level, suggesting persistent bearish sentiment in the market. A breakthrough above this threshold could signal the emergence of increased bullish pressure.
The immediate resistance for the GBP/USD pair is found near the upper boundary of the descending channel at 1.2691. Should the pair successfully navigate past this level, it could reinforce a bullish outlook, setting the stage for a potential rally towards the five-week high of 1.2811, last recorded on December 6.
Conversely, the downside remains a concern, with initial support appearing at the four-week low of 1.2487, established on November 22. A decline below this support level could intensify selling pressure, potentially pushing the pair towards the lower boundary of the descending channel and even its yearly low of 1.2299, reached on April 22. Overall, market participants will be closely monitoring these key levels as they assess the next moves for GBP/USD .
