GBP/USD Breaks Key Support, Dollar Starts Recovery

Key Highlights

  • GBP/USD started a downside correction after struggling near 1.3700.
  • There was a break below a key descending triangle at 1.3535 on the 4-hours chart.
  • EUR/USD extended its decline below the 1.2200 support level.
  • Gold price dropped over $100, while crude oil price remains elevated.

 

GBP/USD Technical Analysis

The British Pound struggled to clear the 1.3700 resistance and started a fresh decline against the US Dollar. GBP/USD broke the 1.3620 support level to start the recent downside correction.

Looking at the 4-hours chart, the pair traded as high as 1.3702 before it declined. There was a clear break below the 1.3620 and 1.3600 support levels. More importantly, there was a break below a key descending triangle at 1.3535.

The pair traded below the 1.3500 level and the 100 simple moving average (red, 4-hours). There was also a break below the 76.4% Fib retracement level of the upward move from the 1.3429 swing low to 1.3702 high.

The next major support is near the 1.3430 level and the 200 simple moving average (green, 4-hours). Any more losses could lead the pair towards the 1.3365 support or the 1.236 Fib extension level of the upward move from the 1.3429 swing low to 1.3702 high.

On the upside, the previous support near the 1.3535 and 1.3550 levels could act as a strong resistance in the near term.

Overall, the US Dollar started a strong recovery, as it was up against most majors. Besides, gold price declined sharply below $1,900 before it found support near $1,820.

Economic Releases

  • UK BRC Like-For-Like Retails Sales for Dec 2020 (YoY) – Forecast +7.9%, versus +7.7% previous.