The GBP/USD exchange rate continues its downward trend, recording 1.2320 yesterday, the lowest level since April 22, 2024. It is currently trading near 1.2350. This pair has declined by about 8% since its peak on September 26, 2024, when it reached 1.3434, down to the low of 1.2320 recorded yesterday.
Recent UK economic data reveals that the British economy is struggling, as shown by the following:
- The quarterly GDP growth index fell to 0%, lower than expectations (0.1%) and the previous reading (0.4%).
- Retail sales showed a monthly growth of 0.2% in November, which is lower than the expected 0.5%.
- The manufacturing PMI for December dropped to 47.0, lower than expectations (47.3) and the previous reading (48.0).
- The services PMI for December recorded a growth of 51.1, which is lower than the expected 51.4.
- The construction PMI for December showed a contraction at 53.3, lower than the expected 54.3 and the previous reading (55.2).
It is worth noting that an important factor has negatively impacted the GBP/USD pair: the strength of the US dollar, due to the outperformance of most US economic data compared to analysts’ expectations, as well as cautious statements from most Federal Reserve members regarding the interest rate trajectory.
Regarding the technical side, if the support level at 1.2393 is broken, there is a possibility of targeting support levels at 1.2290, 1.2218, and 1.2115. If the support level is surpassed, the pair may target resistance levels at 1.2465, 1.2568, and 1.2640.
The Relative Strength Index (RSI) currently stands at 34, indicating negative momentum for the GBP/USD pair. Additionally, the MACD (Moving Average Convergence Divergence) indicator, shown in blue, is below the signal line (orange), which also points to negative momentum.
The Positive Directional Indicator (DMI+) is around 15, while the Negative Directional Indicator (DMI-) stands at approximately 30. The gap between these two indicators is relatively large, suggesting strong selling pressure on the GBP/USD pair. More importantly, the Average Directional Index (ADX) is at about 32, indicating strong downward momentum.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
