As traders navigate the foreign exchange landscape, the British Pound is experiencing notable fluctuations, particularly against the US Dollar. Following a significant decline of five big figures in the two weeks after the U.S. Presidential election, GBP/USD found support at the 1.2500 level. Since then, buyers have rallied, marking a continued recovery into the third week.
In Q3, GBP/USD demonstrated robust performance, but the onset of Q4 has introduced new challenges. The major price movements from 2021-2022 continue to influence current trends, with key Fibonacci retracement levels providing critical support and resistance points. The 50% retracement set a low in April near 1.2300, while the 78.6% retracement helped establish highs above 1.3400 in September and October.
Psychological levels play a significant role in GBP/USD price action. In September, the pair defended the 1.3000 mark before experiencing a substantial bounce. However, after testing this level again a month later, sellers emerged, leading to a drop that established the recent low at 1.2500 three weeks ago. Since then, bullish momentum has been building, with traders eyeing a re-test of the 200-day moving average.
Technical analysis reveals a series of higher highs and lows on shorter-term charts. Last week saw support hold at the prior resistance around 1.2616, paving the way for a new higher high ahead of the U.S. Non-Farm Payroll (NFP) release. The recent pullback has maintained another higher low approximately 100 pips above last week’s low, currently around 1.2717.
Looking ahead, the next major objective for GBP/USD is to re-test the 200-day moving average. If bullish momentum continues, traders will target the 38.2% retracement level at 1.2850 and potentially reach the 50% mark of the previous sell-off just below 1.3000 at 1.2961.
As market dynamics evolve, traders are encouraged to stay informed and consider these technical indicators when making trading decisions.
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