GBP/USD Daily Technical Analysis – 20th January
GBP/USD falling towards 20-Day SMA – Weighed by Negative Retail Sales
Daily Technical Analysis – GBP/USD
The currency pair GBP/USD posted a fresh intra-day low at 1.23353 after the pressure raised on GBP amid negative UK Retail Sales data. GBP/USD lost all of its previous day’s gains and fought its battle with a 20-day SMA at 1.23266.
This level is playing as a critical support level for the currency pair. Any break below this level will trigger an extra bearish trend for the rest of the day. However, the Williams %R suggests that there might be some more room for GBP/USD before a bearish reversal starts, as the pair has not entered an oversold region yet. The MACD indicator with a positive histogram also backs the signal.
The immediate second support level is standing at 1.23108. If the pair continues its decline and move past this level, it will see the next support at 1.22518. On the other hand, if the pair thrive on holding the 20-Day SMA level as suggested by Williams %R, the pair might keep moving higher. The initial resistance level is a daily high of 1.23986. Level 1.24217 acts as the second resistance level for the pair.
GBP/USD Fundamental Analysis
In December, the UK Retail Sales dropped sharply to -1.0% m/m against the forecasted 0.5%. The Core Retail Sales for the UK also fell by 1.1% against the expected 0.4% in December. It is anticipated that the rising cost of living kept consumers from spending during Christmas. The double-digit inflation kept the food and energy prices higher despite easing in prices last month. Therefore, the Bank of England had no choice but to keep raising interest rates to mitigate the effects of inflation.
On the other hand, the USD Index (DXY) was moving higher on Friday at the 102 level prior to the US Home Sales release and a speech from FOMC member Waller. On Thursday, Fed member Brainard also sounded hawkish and said that rates need to keep high to keep inflation at ease. The rising USD also added weight to the declining prices of GBP/USD on the day.
GBP/USD Daily Technical Levels
Support Resistance
1.2335 1.2422
1.2280 1.2454
1.2248 1.2509
Pivot Point: 1.2367
