Technical Analysis

GBP/USD Price Analysis – July 10, 2024

By LonghornFX Technical Analysis
Jul 10, 20243 min

Daily Price Outlook

During the European trading session, the GBP/USD currency pair sustained its upward trajectory, stabilizing near the 1.2809 level and peaking intraday at 1.2812. This rise was driven by multiple factors, including a weakened US dollar and a hawkish stance from Bank of England (BoE) policymaker Jonathan Haskel.

Haskel advocated for maintaining current interest rates in response to ongoing inflationary pressures within the labor market. Meanwhile, the US dollar faced depreciation amidst increasing speculation that the Federal Reserve (Fed) might initiate interest rate cuts as early as September.

BOE's Cautious Interest Rate Stance and Impact on GBP Ahead of Key Economic Data

On the BOE front, policymaker Jonathan Haskel has suggested keeping interest rates unchanged amid ongoing inflation concerns in the UK job market. He stressed the need for greater confidence that inflationary pressures are easing before considering any rate adjustments.

This cautious stance has led to limited movement for the Pound Sterling (GBP) against other major currencies, with investors now focused on upcoming economic data releases.

Specifically, attention is on the upcoming reports on the UK's monthly Gross Domestic Product (GDP) and May's factory output figures, due later this week, which could provide further insights into the economy's health.

Impact of Speculation on Early Fed Rate Cuts on USD and Gold Prices

On the US front, the broad-based dollar is showing signs of weakening amidst mounting speculation that the Federal Reserve could commence rate cuts as early as September. This downward pressure on the USD has bolstered gold prices.

Federal Reserve Chairman Jerome Powell recently addressed the Senate Banking Committee, alluding to the potential for an interest rate reduction while avoiding specific mention of a timeline.

His remarks suggest a data-dependent approach, leaving the market hopeful for a rate cut in the near future. Therefore, the weakening US dollar, fueled by speculation of early rate cuts from the Federal Reserve, has supported GBP pair.

GBP/USD Price Chart - Source: Tradingview
GBP/USD Price Chart - Source: Tradingview

GBP/USD - Technical Analysis

The British Pound (GBP) has shown slight fluctuations against the US Dollar (USD) in the latest trading session, currently priced at $1.27871. The currency pair is navigating within a narrowing range, indicating potential volatility ahead.

The market is closely watching the pivot point at $1.27894, which aligns with the 50-period Exponential Moving Average (EMA), a crucial indicator that often signifies support or resistance.

Immediate resistance is identified at $1.28232, with further resistance levels at $1.28323 and $1.28446. These levels are critical as they represent potential hurdles for any upward momentum in the GBP/USD pair.

Conversely, immediate support lies at $1.27894, with subsequent support levels at $1.27350 and $1.27348. These support levels will be pivotal in cushioning any downside movement.

The Relative Strength Index (RSI) stands at 44.16, suggesting a mildly bearish sentiment as it hovers below the neutral 50 mark. This indicates that the market sentiment is leaning towards selling pressure, though not yet in oversold territory.

The 50 EMA at $1.27894 acts as a significant support level, and any breach below this could signal further bearish momentum.

For traders, a sell position below $1.27923 is advisable, targeting a take profit at $1.27350 with a stop loss set at $1.28323.

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