The GBP/USD currency pair is experiencing a downward trend, with analysts predicting a potential drop towards 1.3240. This forecast is based on the US Dollar's strength, which is expected to continue as the Federal Reserve (Fed) is likely to raise interest rates this year. The recent release of strong Nonfarm Payrolls (NFP) data further supports this expectation, with the economy creating 172K jobs, surpassing estimates. The US Dollar Index (DXY) is holding onto its gains, indicating a strong performance against major currencies.
The technical analysis of the GBP/USD pair suggests a bearish near-term bias, with the price trading below the 20-day Exponential Moving Average (EMA) at 1.3434. The Symmetrical Triangle formation indicates a sideways trend, but the price has slipped away from its recent consolidation highs, with the Relative Strength Index (RSI) near 38 hinting at building downside pressure. Initial resistance is located at the 20-day EMA, and a break above it could expose the descending resistance trend line near 1.3585.
On the downside, the former rising support structure is now tracked by the break area around 1.3239, which acts as the first meaningful support level. A clear drop through this zone would likely open the way to a deeper bearish extension towards 1.3200. This technical analysis is supported by the economic indicator, Gross Domestic Product (GDP), which is a key measure of UK economic activity. A rise in GDP is generally bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.
In conclusion, the GBP/USD pair is likely to continue its downward trend, with the US Dollar's strength and the Fed's potential interest rate hikes as the primary drivers. The technical analysis and economic indicators support this forecast, with the price expected to drop towards 1.3240. However, it is important to note that currency markets are volatile, and unexpected events can significantly impact the market.
