GBP/USD poised for further decline?

<p>GBP/USD (daily chart) has approached a full week of general decline that has brought the currency pair down well below its 50-day moving average. Current […]</p>

GBP/USD (daily chart) has approached a full week of general decline that has brought the currency pair down well below its 50-day moving average. Current price action reached a low slightly below the key 1.6500 level to hit the 61.8% Fibonacci retracement of the last major bullish run, which ran from early February’s 1.6250 low up to mid-February’s four-year high at 1.6821. The pair has also dipped slightly below a major bullish trend line that extends back to the 1.4800-area double-bottom low in July of 2013.

The current bearishness in GBP/USD could be a precursor of further decline that could break down the steep uptrend that has been in place for the past eight months, which culminated in February’s noted four-year high. Now sitting atop key support, the currency pair is currently at a critical juncture. Further declines would be indicated on a convincing breakdown below this support area – around the 1.6475 level – which could then lead the way to a drop towards further key support around 1.6300. A drop of this magnitude should indicate a potential breakdown of the eight-month bullish trend.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.