GBP/USD Market Overview:
- In the wake of the U.S. Presidential election, GBP/USD experienced a notable decline, plummeting as much as 500 pips from its previous highs, but discovered crucial support around the 1.2500 mark.
- Since testing the 1.2500 level, bullish momentum has regained traction, marking a third consecutive week of upward movement.
- Join us for an in-depth analysis of GBP/USD across various time frames in the upcoming weekly webinar: Register here for more details.
Throughout the third quarter, GBP/USD demonstrated robust performance, leading into a promising 2024. However, the arrival of the fourth quarter has seen a shift in momentum. The significant price movement from 2021-2022 remains influential, with Fibonacci retracement levels revealing critical support and resistance points over the last year. The 50% Fibonacci retracement facilitated a low around the 1.2300 level in April, while the 78.6% level capped the highs in September and October, peaking above 1.3400. Following persistent testing of this zone, a significant sell-off ensued, resulting in an eight-week downturn that pushed the pair below the 200-day moving average.
GBP/USD Weekly Price Chart
Major Levels of Interest
Psychological price levels continue to play an integral role in the dynamics of GBP/USD trading. In September, the pair defended the 1.3000 level, leading to a rebound of over 400 pips until Fibonacci resistance was encountered later that month. Following this, sellers dominated upon re-testing key levels the subsequent month, setting up a low at 1.2500 that has since turned bullish, with buyers focusing on a potential re-test of the 200-day moving average.
GBP/USD Daily Price Chart
Short-Term Outlook
A look at the four-hour chart reveals a formation of higher highs and higher lows, indicating bullish momentum. Last week, the pair established support around the former resistance at 1.2616, which subsequently prompted a fresh higher high before the U.S. Non-Farm Payroll (NFP) report. The recent pullback remains supported by a higher low near 1.2717.
The upcoming challenge for buyers is to re-test the 200-day moving average, followed by the 38.2% retracement level, which stands at 1.2850. Should bulls extend their momentum, the 50% retracement of the prior sell-off is observed just under the 1.3000 mark at 1.2961.
GBP/USD Four-Hour Chart
--- Authored by James Stanley, Senior Strategist
