British Pound Outlook: US Dollar Strength Holds GBP/USD Bulls at Bay

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UK British Pound Technical Outlook: Neutral

The Pound Sterling (GBP) has recently benefited from positive retail and unemployment data that has increased the probability of a rate hike in December as the BoE (Bank of England) prepares to tackle rising inflation.

Find out more about the impact of interest rates on the foreign exchange market

Although fundamental factors have continued to drive risk sentiment for major currency pairs, the British Pound currently remains under pressure against a stronger US Dollar, allowing GBP/USD bears to drive prices lower.

Amid growing concerns surrounding the potential implementation of Article 16 and the risk of an UK-EU trade war, the dovish tone from the ECB (European Central Bank) and rising Covid-19 cases reported in Europe have supported EUR/GBP weakness as the Euro continues to suffer against the Sterling.

GBP/USD Technical Analysis

After three consecutive weeks of losses, GBP/USD bulls managed to end the week back above the key psychological level of 1.34, currently providing support for the imminent move. As price action continues to trade within the bounds of a descending channel, the key Fibonacci retracement levels of the 2020 – 2021 move will likely continue to provide additional zones of support and resistance.

While prices currently remain below the 50-week moving average (SMA), the CCI (commodity channel index) has fallen into negative territory, a potential indication that the pair may be oversold.

GBP/USD Weekly Chart

British Pound Outlook: US Dollar Strength Holds GBP/USD Bulls at Bay

Chart prepared by Tammy Da Costa using TradingView

However, after the formation of a death cross on the daily time-frame, GBP/USD has continued to decline in an effort to drive prices towards trendline support at 1.32. Although the CCI has climbed back within range, further downside may push the CCI back into oversold territory. For now, key levels of support and resistance remain between 1.32 & 1.36, the lower and upper bounds of the above-mentioned channel.

GBP/USD Daily Chart

British Pound Outlook: US Dollar Strength Holds GBP/USD Bulls at Bay

Chart prepared by Tammy Da Costa using TradingView

EUR/GBP Technical Analysis

After the formation of a death cross on the daily chart below, EUR/GBP has continued along a downward trajectory, finding support at the key psychological level of 0.84. As the CCI continues to threaten oversold territory, bears continue to drive the systemic, prominent trend, at least for now.

EUR/GBP Daily Chart

British Pound Outlook: US Dollar Strength Holds GBP/USD Bulls at Bay

Chart prepared by Tammy Da Costa using TradingView

— Written by Tammy Da Costa, Analyst for DailyFX.com

Contact and follow Tammy on Twitter: @Tams707

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