GBP/USD Daily Chart Analysis – 2024-03-27

Technical Analysis:

The GBP/USD pair is under pressure, trading off by 0.09% and settling at the base of the 1.2610-1.2620 range. The U.S. dollar’s firmness, as evidenced by a 0.08% increase, is contributing to the pound’s weakness. This dynamic is partially due to the stronger USD, with the weaker Chinese Yuan and Japanese Yen in Asia also lending support to the greenback amid mixed equity markets.

From a technical standpoint, the 5, 10, and 21-day moving averages are trending downward, while daily momentum studies continue to decline, suggesting a bearish outlook. The 20-day Bollinger bands are widening, reinforcing the bearish setup on the daily charts. A break below the key level of 1.2575, which is the 38.2% Fibonacci retracement of the October to March rise, would confirm the bearish trend, potentially leading to a retest of the low at 1.2515.

Conversely, a sustained move above high of 1.2681 could suggest that a temporary base is in place, possibly leading to a shift in sentiment.

UK businesses are scaling back staffing and wage increase plans, likely as a preemptive measure in response to the impending minimum wage hike set to begin in April. This cautious approach by businesses could signal concerns over domestic cost pressures and economic health, potentially dampening investor confidence in the pound.

Overall Market Sentiment: The prevailing market sentiment is bearish for the GBP/USD pair, reflecting the impact of the stronger USD and the cautious wage and hiring outlook in the UK.

Sentiment Percentage Breakdown:

• 30% Positive: Minimal bullish sentiment is present due to the possibility of the pound finding a floor if it maintains above Friday’s high.
• 20% Neutral: There’s a neutral stance in the market, with participants waiting for clearer signals before committing to a direction.
• 50% Negative: The dominant sentiment is bearish, driven by downward-trending technical indicators and subdued fundamental factors from the UK.