- The Pound Sterling drops below 1.2000, set to finish the week with gains of more than 1.50%.
- GBP/USD: Failure to hold above 1.2100 exacerbated a fall toward the November 24 low of 1.2049.
- GBP/USD Price Analysis: A break below 1.2000 will exacerbate a fall towards 1.1800.
The GBP/USD hovers below 1.2100 amid a subdued trading session on low volume conditions spurred by the US Thanksgiving holiday, with the US equity market set to close on Friday, around 13:00 ET. Broad US Dollar (USD) strength spurred by a risk-off impulse caused a retracement on the GBP/USD. At the time of writing, the GBP/USD is trading at 1.2079, registering a minuscule loss of 0.27%.
GBP/USD Price Analysis: Technical outlook
From a daily chart perspective, the GBP/USD remains neutral-upward biased, though lacking the force to break above the 200-day Exponential Moving Average (EMA) around 1.2181. November’s monthly high of around 1.2153 was shy of piercing the latter. Therefore, the GBP/USD would be subject to selling pressure, opening the door for further downside.
The GBP/USD 4-hour chart suggests that the major appears to be topping around the 1.2150 area in the near term, failing to break above the August 17 daily high of 1.2142, exacerbating a drop below 1.2100. Also, the Relative Strength Index (RSI) exiting from overbought conditions after peaking around 1.2150, which could mean two things: traders booking profits after a fall towards multi-decade lows around 1.0300 towards 1.2000, and also some US Dollar (USD) short covering.
Therefore, the GBP/USD path of least resistance is downwards. GBP/USD first support would be the S1 daily pivot point at 1.2050. Break below will expose the 1.2000 figure, followed by the 50-Exponential Moving Average (EMA) at around 1.1931.