- GBP/USD extended its decline below the 1.2440 and 1.2400 support levels.
- A crucial bearish trend line is forming with resistance near 1.2415 on the 4-hours chart.
- EUR/USD remained well bid above 1.1200 and EUR/GBP surged above 0.9120.
- The UK GDP is likely to contract 2% in Q1 2020 (QoQ).
GBP/USD Technical Analysis
This past week, the British Pound topped near the 1.2550 level against the US Dollar. EUR/USD started a fresh decline below the 1.2500 support level and moved into a bearish zone.
Looking at the 4-hours chart, the pair traded as high as 1.2542 and remained well below the 100 simple moving average (red, 4-hours). There was a break below the 1.2440 and 1.2400 support levels.
The pair even broke the last swing low at 1.2334 low and settled below the 200 simple moving average (green, 4-hours). It opened the doors for more losses and the pair traded close to the 1.236 Fib extension level of the upward move from the 1.2334 low to 1.2542 high.
If it continues to move down, the next support could be 1.2225 or 1.2200. The 1.618 Fib extension level of the upward move from the 1.2334 low to 1.2542 high is also near 1.2205.
Conversely, the pair might attempt a fresh increase above the 1.2380 resistance. However, there are many hurdles for the bulls near 1.2400 and 1.2420. There is also a crucial bearish trend line forming with resistance near 1.2415 on the same chart.
A successful close above the trend line and the 200 SMA could push GBP/USD higher towards the 1.2500 resistance or even 100 SMA.
Overall, GBP/USD is trading in a bearish zone and it could continue to move down unless there is a clear break above 1.2420. Conversely, EUR/USD remained well bid above 1.1200 and it even climbed above 1.1250, resulting in a sharp upward move in EUR/GBP towards 0.9180.
Upcoming Economic Releases
- UK GDP Q1 2020 (QoQ) - Forecast -2.0%, versus -2.0% previous.
- Euro Zone Core CPI for June 2020 (YoY, Preliminary) - Forecast +0.8%, versus +0.9% previous.
- Euro Zone CPI for June 2020 (YoY, Preliminary) - Forecast +0.1%, versus +0.1% previous.