GBP/USD Daily Chart Analysis – 2024-02-15

Technically, GBP/USD is positioned just above a major support zone as indicated by the recent price action. The currency pair has formed a bearish outside day followed by a subsequent fall, underscoring the bearish sentiment. The downward trajectory of the 5, 10, and 21-day moving averages, along with the expanding Bollinger bands, suggest increasing volatility and bearish momentum. The daily momentum studies reinforce this view, signaling bearishness at the range lows. Notably, there is substantial support near the 1.2500 level, with additional significant technical markers at 1.2535 (the previous low), 1.2520 (the 38.2% retracement ), and the 1.2500. A decisive close below 1.2500 could open the path towards 1.2425, representing the 50% retracement.

Fundamentally, the GBP/USD’s direction is heavily influenced by the impending release of UK economic data including GDP, industrial production, and trade figures. These data points are critical for shaping the Bank of England’s monetary policy expectations, especially following the recent CPI figures. The anticipation surrounding this data release may cause heightened market sensitivity, with potential implications for interest rate expectations and currency valuation.

Overall Market Sentiment: The market sentiment for GBP/USD is characterized by a blend of caution and bearish anticipation:

• 60% Negative: This sentiment is predominately influenced by the technical indicators suggesting bearish momentum and the critical nature of the support levels just below the current price.
• 30% Neutral: Despite the negative technical signals, there remains a wait-and-see sentiment in the market due to the upcoming UK economic data which could provide new direction.
• 10% Positive: A minor positive sentiment persists due to the potential for the economic data to surprise positively, which could lead to a bounce from key support levels.

The negative sentiment is driven by the technical setup and the recent bearish price action. The neutral sentiment accounts for the uncertainty ahead of the UK data release. The slight positive sentiment considers the possibility of a bullish reversal if the data exceeds market expectations, leading to a more hawkish outlook for the Bank of England’s policy decisions.