Technical Analysis

GBP/USD Price Analysis – June 17, 2024

By LonghornFX Technical Analysis
Jun 17, 20242 min

Daily Price Outlook

The GBP/USD pair fell sharply below the 1.2700 mark, trading at 1.2683 as of writing, due to risk aversion and political turmoil in Europe.

The decline was exacerbated by easing inflation expectations in the UK, with the latest NanBoE/Ipsos survey showing a decrease from 3.0% to 2.8% in May. This is the lowest level since August 2021.

Political Uncertainty Adds Pressure:

The upcoming UK elections on July 4th are also adding pressure to the pound. Recent polls show the Reform party gaining momentum over the Conservatives, raising concerns about potential political instability.

US Economic Data and Fed Outlook:

Meanwhile, US economic data released on Friday painted a mixed picture. Import prices declined by 0.4% in May, exceeding expectations, while consumer sentiment fell to a six-month low of 65.6. However, 5-year inflation expectations remained unchanged at 3.3%, suggesting persistent price pressures.

Key Events and Levels to Watch:

Investors will closely monitor the Bank of England's monetary policy meeting on Thursday, where the central bank is expected to raise interest rates by 25 basis points to 5.25%. The release of UK CPI data on Wednesday and retail sales and PMI figures on Friday will also be closely watched for further clues on the economic outlook and potential impact on the pound.

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

GBP/USD - Technical Analysis

The GBP/USD pair is facing downward pressure, trading below its pivot point of 1.2678 on the 4-hour chart. The 50-day Exponential Moving Average (EMA) at 1.2758 is acting as a significant resistance, further solidifying the bearish outlook.

The Relative Strength Index (RSI) reading of 35 indicates oversold conditions, hinting at a potential bounce in the near term. However, the broader trend remains bearish, and traders should exercise caution.

Key resistance levels to monitor are 1.2723, 1.2765, and 1.2808. A break above these levels could negate the bearish bias and signal a potential reversal. On the downside, immediate support lies at 1.2645, followed by 1.2613 and 1.2581.

A decisive break below these levels could trigger further selling pressure, potentially leading to a deeper decline for the pound.

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