**FxWirePro: GBP/USD Struggles to Extend Its Recovery – Good to Sell on Rally**
*Original article by: EconoTimes FxWirePro*
*(All analysis and credit for insights belong to EconoTimes FxWirePro, with additional elaboration, context, and expansion provided in this article.)*
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The GBP/USD currency pair has been a central focus in Forex markets as traders weigh the prospects of a British economic rebound against persistent global uncertainties. As of the latest sessions, the pound has demonstrated difficulty in sustaining a meaningful recovery, keeping downward risks firmly in play. In this comprehensive assessment, we analyze the current trends, technical outlook, and fundamental drivers impacting GBP/USD, building upon the core insights from EconoTimes FxWirePro.
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### Recent Performance Overview
The British pound versus the US dollar has seen frequent fluctuations amid a series of domestic and international pressures. Key points behind the pair’s current performance include:
– **Brexit Aftermath**: Lingering uncertainties in trade arrangements continue to weigh on sterling.
– **COVID-19 Effects**: Recovery from the pandemic remains uneven, with the UK economy still working to regain lost ground.
– **Global Rate Hikes**: The US Federal Reserve’s aggressive tightening contrasts with a more cautious stance from the Bank of England (BoE).
– **Market Sentiment**: Risk sensitivity and flows to the perceived safety of the dollar persist.
The culmination of these factors, as highlighted by EconoTimes FxWirePro, has placed the GBP/USD pair in a challenging spot. The currency has attempted rebounds but struggled to generate sustained momentum, making rallies potential selling opportunities rather than buy-the-dip moments.
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### Technical Analysis
The technical landscape for GBP/USD provides further context for its recent struggle. Key observations and levels include:
**Daily Chart View:**
– **Trend Direction**: The prevailing trend remains bearish, underscored by a sequence of lower highs and lower lows.
– **Resistance Levels**: Multiple resistance points, especially near the 1.2700 psychological mark and the intermediate 1.2650 area, have capped recent attempts at recovery.
– **Support Levels**: Strong support exists at 1.2500 and just below at 1.2450. A firm break beneath these could invite steeper declines.
**Indicators:**
– **Moving Averages**: The 50-day moving average lies above current prices, signaling ongoing downside momentum.
– **Relative Strength Index (RSI)**: The RSI remains below the midpoint, indicating lingering bearish bias without venturing into oversold territory.
– **MACD**: The Moving Average Convergence Divergence indicator continues to favor bears, with the signal line above the MACD line and no clear crossover in sight.
**Price Action Summary:**
– The pound has bounced from support zones but met resistance almost immediately, forming reversal candlesticks (like shooting stars and bearish engulfing patterns) on the daily chart each time it has attempted a rally.
– Volume analysis illustrates a lack of conviction behind up-moves, reinforcing the idea that sellers retain control.
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### Fundamental Factors
A number of fundamental elements, discussed extensively by EconoTimes FxWirePro and supplemented here, support the current predisposition to sell on rallies:
**1. Divergence in Central Bank Policies**
– **Bank of England (BoE)**:
– Recent communications from the BoE indicate a cautious approach to interest rate hikes, acknowledging concerns over stunting growth and amplifying consumer pain.
– Inflation in the UK, while elevated, is declining in part due to easing energy prices and softer economic activity.
– Market expectations for further BoE tightening have diminished, capping enthusiasm for the pound.
– **US Federal Reserve**:
– The Fed’s persistent hawkishness, with ongoing hints at additional rate hikes or a prolonged higher-rates environment, continues to bolster the dollar.
– US economic data, especially labor market resilience and
Read more on GBP/USD trading.