28 Oct 2024

• GBP/USD has declined to 1.2945 during the early European session on Monday, reflecting a decrease of 0.11% for the day.
• The bearish sentiment surrounding the pair persists as it trades below the 100-day EMA and is supported by a negative RSI indicator.
• The initial target for further decline is set at 1.2870, while the nearest resistance level is identified at 1.3000.

OVERVIEW

• The GBP/USD pair has further decreased to approximately 1.2945 in the early European session on Monday. The strength of the US Dollar (USD), driven by expectations of a more measured approach to easing by the Federal Reserve (Fed), is contributing to the pair's decline. With no significant economic data forthcoming from either the UK or the US, the fluctuations in USD pricing are expected to remain a crucial factor affecting the pair.
• GBP/USD keeps the bearish vibe unchanged as the major pair holds below the key 100-period Exponential Moving Average (EMA) on the daily timeframe. The downward momentum is also supported by the Relative Strength Index (RSI), which stands below the 50-midline near 37.70, supporting the sellers in the near term. 
• The lower limit of the Bollinger Band at 1.2870 acts as an initial support level for GBP/USD. A decisive break below this level could see a drop to 1.2763, the low of August 13. The additional downside filter to watch is 1.2665, the low of August 8. 
• The initial positive barrier is identified at the psychological level of 1.3000. A breakthrough beyond this level may pave the way for an ascent towards the subsequent bullish target at 1.3071, which represents the peak reached on October 18. The following obstacle is anticipated at 1.3185, corresponding to the high recorded on September 5.
• The data supports the perspective that the Federal Reserve is likely to implement modest interest rate reductions throughout the year. This development is expected to lead to an increase in US Treasury bond yields, which will further strengthen the US dollar. Conversely, the British Pound (GBP) faces pressure due to increasing expectations for additional interest rate cuts by the Bank of England (BoE) in November and December. This sentiment is reinforced by a decline in the UK Consumer Price Index, which has reached its lowest point since April 2021 and is now below the central bank's 2% target.
• This fundamental context indicates that the GBP/USD pair is likely to experience downward movement. From a technical standpoint, the recent repeated failures to maintain levels near the 1.3000 psychological threshold further support the likelihood of a continued decline from the 1.3435 region, which represents the highest point since February 2022 reached last month.