GBP/USD extends this week's decline from near 1.2300, touching a three-week low in Asian trading on Thursday, pressured by a stronger US dollar. The pair weakens further below the key 1.2100 level and faces selling pressure. The Relative Strength Index (RSI) on the 4-hour chart drops below 50, and the latest 4-hour candles close below the 100-period and 50-period Simple Moving Averages (SMA), indicating a downtrend.
The level at 1.2100 (a psychological threshold) is considered the main support. If buyers fail to defend this level, further losses towards 1.2050 (the recent low) could be witnessed.
To attract technical buyers, GBP/USD needs to surpass the resistance zone of 1.2190-1.2200, where the 100-period SMA and the 23.6% Fibonacci retracement level converge. In this scenario, 1.2250 (the 200-period SMA) and 1.2300 (the 38.2% Fibonacci retracement level) could be seen as the next resistance levels. After a sharp decline on Tuesday, GBP/USD rallied back to 1.2200 on Wednesday. However, market caution prevented a sustained recovery.
US data released on Tuesday revealed that private sector business activity expanded slightly faster in early October compared to September, with the S&P's global composite PMI improving from 50.2 to 51. While US Treasury bond yields continued to decline, the US dollar benefited from the optimistic PMI data, putting pressure on GBP/USD.
In early European trading on Wednesday, US stock index futures traded negatively, and the yield on the 10-year US Treasury note maintained a modest daily increase of around 4.85%, supporting the US dollar.
In the latter part of the day, the US New Home Sales data for September will be considered for new momentum. Some policymakers at the Federal Reserve have expressed concerns about the negative impact of high-interest rates on the housing market. Therefore, a significant decline in this data could immediately harm the US dollar.
On Thursday, the US Bureau of Economic Analysis will release its initial estimate of third-quarter Gross Domestic Product (GDP) growth.
The level at 1.2100 (a psychological threshold) is considered the main support. If buyers fail to defend this level, further losses towards 1.2050 (the recent low) could be witnessed.
To attract technical buyers, GBP/USD needs to surpass the resistance zone of 1.2190-1.2200, where the 100-period SMA and the 23.6% Fibonacci retracement level converge. In this scenario, 1.2250 (the 200-period SMA) and 1.2300 (the 38.2% Fibonacci retracement level) could be seen as the next resistance levels. After a sharp decline on Tuesday, GBP/USD rallied back to 1.2200 on Wednesday. However, market caution prevented a sustained recovery.
US data released on Tuesday revealed that private sector business activity expanded slightly faster in early October compared to September, with the S&P's global composite PMI improving from 50.2 to 51. While US Treasury bond yields continued to decline, the US dollar benefited from the optimistic PMI data, putting pressure on GBP/USD.
In early European trading on Wednesday, US stock index futures traded negatively, and the yield on the 10-year US Treasury note maintained a modest daily increase of around 4.85%, supporting the US dollar.
In the latter part of the day, the US New Home Sales data for September will be considered for new momentum. Some policymakers at the Federal Reserve have expressed concerns about the negative impact of high-interest rates on the housing market. Therefore, a significant decline in this data could immediately harm the US dollar.
On Thursday, the US Bureau of Economic Analysis will release its initial estimate of third-quarter Gross Domestic Product (GDP) growth.
