GBP/USD 240 Minute Chart Analysis

The British pound (GBP) saw a rally on Monday, but its overall trend against the US dollar (USD) remains bearish. GBP/USD is encountering resistance around 1.2350 while finding support near 1.2100. This downtrend is partially attributed to hawkish comments from Federal Reserve officials, which have increased the likelihood of another 75 basis points rate hike in November and boosted the US dollar. The upcoming UK employment and wage growth data are expected to provide insights into the UK economy’s health, with wage growth anticipated to moderate but remain elevated. Geopolitical tensions, particularly the Israel-Palestine conflict, are supporting safe-haven demand for the US dollar. Furthermore, concerns about a global recession persist, especially in Europe, which is putting pressure on the British pound, as the UK economy could follow the Eurozone into a recession. While the Bank of England is expected to raise rates again in November to combat high inflation, the pace of rate hikes may slow due to recession risks.

In terms of technical analysis, GBP/USD is currently trading in a short-term range trend, testing support levels at 1.2196. The price is below the 200 and 50-day moving averages, indicating a bearish range market. Scenario 1 suggests that the price could continue to rise, testing the 1.2340 level and potentially reaching upper levels around 1.2356. Further bullishness might lead to testing the 1.2391 level, which is the topmost resistance. Scenario 2, on the other hand, envisions price declining from current levels, finding support at 1.2176 and 1.2148, with a potential drop to 1.2106. If this level does not hold, the price could move lower to test 1.2085, serving as a significant support level. The short-term momentum for the pair is currently nearing bearish territory but is within a range, and the RSI is heading towards the overbought zone. The market may fluctuate between the levels of 1.2148 to 1.2348, and monitoring how price reacts at these levels is crucial. The Relative Strength Indicator (RSI) suggests a bearish range bias for the market.