The GBP/USD currency pair is currently trading above a descending channel, indicating a potential weakening of its bearish trend. The upper boundary of this channel, positioned around the 1.2540 level, serves as a key support level. During the European trading session on Tuesday, the pair made a slight recovery, trading at approximately the 1.2550 level. Analyses of daily charts reveal that the previous bearish momentum may be softening, as the pair is trading above the channel’s upper boundary.
Despite this positioning, the 14-day Relative Strength Index (RSI) remains below the neutral threshold of 50, suggesting that a bearish sentiment is still present. Furthermore, the pair is trading beneath its nine- and 14-day Exponential Moving Averages (EMAs), indicating weak short-term momentum. If the GBP/USD were to break through these moving averages decisively, it could signify a shift from bearish to bullish sentiment.
On the downside, the GBP/USD pair is testing the channel’s upper boundary near 1.2540. Should the pair reverse back into the channel, it would likely reinforce bearish trends and push the price towards its seven-month low of 1.2487 reached on November 22. A break below this level could further increase bearish pressure, potentially driving the currency pair down to a yearly low of 1.2299, recorded on April 22. Additional declines could target the lower boundary of the descending channel at approximately 1.2160.
On the upside, immediate resistance is found at the nine-day EMA at 1.2565, with the 14-day EMA providing further resistance at 1.2585. A successful breach of these resistance points could signal an increase in bullish momentum, paving the way for an ascent towards the six-week high of 1.2811 reached on December 6.
