- GBP/USD is sliding and forming a peak formation.
- Bears are seeking a move down to test the 1.2620s.
GBP/USD is being pressured to the downside in lunchtime NY trade and is taking on a support structure that could lead the way to a move into test the 1.2020s and lower for the remainder of the day.
GBP/USD H1 chart
The hourly chart shows GBP/USD peaking in the 1.2650s and this gives rise to a test of the neckline of the W-formation as illustrated in the above chart.
GBP/USD M15 chart
On the 15 and 5-min charts, we can see the price taking on a support structure.
The 5-min chart shows the price action up close and the break in structure offers prospects of a move lower whereby resistance could come in near 1.2640 if there is going to be a retest of the prior lows as illustrated in the chart above.
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The GBP/USD pair has broken through a critical support level, indicating the potential for further downside. Bears have taken the driver’s seat and are flexing their muscles as they set their sights on the 1.2620 level.
From a technical perspective, the GBP/USD pair has broken below the key 1.2700 support level. This is a bearish sign and indicates that the downward trend could continue. The pair is currently trading around the 1.2650 area, near the 23.6% Fibonacci retracement level. This could hold as support and prevent the pair from dropping below 1.2620.
From a fundamental standpoint, the GBP has been weakening since the UK government’s decision to quit the EU. This decision has had a negative impact on the British economy, reducing investors’ confidence in the currency. At the same time, the US economy has been showing signs of strength with economic data signaling expansion. This has driven the US Dollar higher against the Pound.
Looking ahead, the GBP/USD pair could face further pressure if risk appetite continues to improve. If risk appetite falters, the pair could gain some support. However, the pair is likely to remain under pressure while the UK continues the long process of negotiating an exit from the European Union.
Overall, the GBP/USD pair’s bearish trend looks set to continue, with a possible target of 1.2620. Investors should remain on alert as there could be further downside potential if the pair falls below this key level.
