GBPUSD: Bears face limited downside ahead of BoE's Bailey speech
On Tuesday morning, GBPUSD is testing the 100-bar Exponential Moving Average (EMA) support, pulling back from last week's bounce. Traders are on alert as they await comments from Bank of England Governor Andrew Bailey.
Sellers keep the reins but have limited downside room available
While GBPUSD’s failure to stay above the 100-EMA and bearish MACD signals encourage sellers, a declining RSI (14) and a six-month-old ascending support line suggest only limited room for further decline.
Key technical levels to watch
The GBPUSD pair is currently supported by the 100-EMA around 1.2985 and an upward trend line near 1.2950, limiting immediate downside potential. If these levels break, the 50% Fibonacci retracement from April to September at 1.2865 could attract sellers, followed by the 61.8% retracement and August low at 1.2730 and 1.2665.
On the upside, the 50-EMA and the 23.6% Fibonacci level around 1.3085 and 1.3165 will be crucial barriers. However, the key focus will be the horizontal resistance zone near 1.3230-40. If GBPUSD can hold above 1.3040, the next target could be around 1.3315-20, with the previous monthly high at 1.3435 acting as a potential stopping point.
Bears approach key support zone
GBPUSD is nearing important support levels as traders wait for comments from BoE’s Bailey, along with this week’s UK and US PMIs and Durable Goods Orders. With a more hawkish stance from the Fed compared to the BoE and concerns about the UK’s economic strength relative to the US, the pair is likely to maintain its downward trend, even if the downside potential seems limited.
