GBP/USD Update And Forecast: Bears Target Weekly Support
Even though the Pound is still hurting from Friday’s severe plunge, the pair is testing the bull’s intentions, representing a significant region of stability on the weekly chart.
A top-down assessment is used to arrive at a bearish leaning. A breach beneath 1.32 exposes the possibility of considerable downside in the latter stages of the year and the beginning of the new year if this level is not broken.
Review Of The Technical Details
GBP/USD CHART Source: Tradingview.com
On the negative, the next stable support level is situated at 1.3160, which is the previous low. Despite the fact that the Relative Strength Index (RSI) signal on the four-hour chart is still over 30, this indicates that there is more negative left until the pair becomes technically oversold.
If 1.3160 proves to be a strong barrier, more losses toward 1.3135 (the December 11, 2020 low) and 1.3100 (the psychological threshold) are possible.
According to the other side, the 1.3240 (20-period SMA) serves as the initial barrier before the 1.3300 (psychological level) and 13260 (50-period SMA and 100-period SMA) levels.
An Outline Of The Fundamentals
In light of fresh fears about the coronavirus Omicron strain impacting economic activity, the Pound fell dramatically on Friday and continued to fall early Monday.
The Pound remained on the defensive as a result. The pair is now trading below the 1.3200 level and shows no indications of regaining its strength.
A total of more than 140,000 infections of coronavirus strain were recorded in London for the week ending December 19.
Dominic Raab, the Deputy Prime Minister of the United Kingdom, stated that 104 people in hospitals had the new Omicron variety, with 12 of them dying.
Multiple news sites stated that government experts were afraid that the UK’s medical system would be overburdened if extra limitation measures were not put in place before the Christmas vacation.
Even in the absence of significant data announcements, market investors will be keeping a careful eye on any new developments relating to the coronavirus.
Meanwhile, markets remained risk-averse at the start of the week, making it harder for the British Pound to find support. The FTSE 100 Index in the United Kingdom is off more than 2%, while the S&P Futures Index is down 1.8%.
On the other hand, the Dollar is holding up quite well versus its competitors early Monday, despite the fact that the 10-year US Treasury note yield has fallen more than 2% to below 1.4%.
If US equities continue to fall, this might give the Dollar a significant lift in the second part of today’s trading session while allowing for the bearish strain on the Pound to remain intact.