Our analysis expects the GBP/USD to remain weak in the coming week due to several factors:
- Renewed US Dollar Demand: The US Dollar is regaining strength due to geopolitical tensions and hawkish comments from Federal Reserve officials. This weakens the Pound in comparison.
- Dovish Bank of England: The Bank of England’s stance against aggressive rate cuts weakens the Pound’s appeal.
- Technical Indicators: Technical indicators like the RSI suggest further downside potential for GBP/USD.
Key Levels to Watch:
- Support: 1.2589 (200-day SMA), 1.2540 (mid-February low), 1.2500, 1.2400
- Resistance: 1.2660 (confluence of 100-day & 50-day SMA), 1.2700 (channel support turned resistance), 1.2720 (21-day SMA), 1.2803 (weekly high)
Upcoming Events that Could Impact GBP/USD:
- US Economic Data: S&P Global Manufacturing PMI, ISM Manufacturing PMI, JOLTS Job Openings, ADP Employment Change, ISM Services PMI, Nonfarm Payrolls
- Fed Policymaker Speeches: These will influence US interest rate expectations and impact the Dollar’s value.
Possible Scenarios:
- Scenario 1: Bearish Breakout (More Likely): If the price breaks decisively below the 200-day SMA (1.2589), it could lead to a further decline towards 1.2400 or even lower.
- Scenario 2: Limited Upside: If the price finds support around the current level and rebounds, it might attempt to reach the 1.2660 area (confluence of 100-day & 50-day SMA).
Overall, the analysis favors a downtrend for GBP/USD in the coming week, with key support levels to watch for potential buying opportunities.