The GBP/USD currency pair is currently trading in negative territory, hovering around the 1.2700 level in the early European session on Monday. The outlook remains bearish as the pair continues to stay below the 100-day Exponential Moving Average (EMA). The Relative Strength Index (RSI) also indicates a lack of upward momentum, reinforcing the downward trend. Traders are particularly eyeing the psychological support level at 1.2600, while immediate resistance could be found at approximately 1.2834.
The recent decline in GBP/USD is largely attributed to the strengthening US Dollar, which appears buoyed by a combination of factors. Rising geopolitical tensions in West Asia, along with the potential for the US Federal Reserve to adopt a less aggressive approach to interest rate cuts, have contributed to the dollar’s strength. Additionally, tariff threats from the newly elected US President have further supported the Greenback. Market participants will focus on the upcoming release of the ISM Manufacturing Purchasing Managers Index (PMI) data, which could influence market sentiment.
From a technical perspective, the bearish sentiment surrounding GBP/USD remains intact. The price’s positioning below the 100-day EMA signals continued weakness, while the RSI remains below the neutral mark, indicating potential further declines. If selling pressure persists, the pair could reach the lower Bollinger Band limit near 1.2445. A breach of this level might lead to a drop down to 1.2331, a significant low experienced in late April.
On the other hand, should the GBP/USD make a recovery, it must first overcome resistance at 1.2834. A sustained move above this point could open the path for a rally towards the 1.2890 – 1.2900 range, aligning with the 100-day EMA. However, reaching the key psychological resistance at 1.3000 could prove difficult for bullish traders.
