GBP/USD Remains Bearish Below 1.2780; Greenback Supported By High Rates
The Pound Sterling (GBP) was not in a good spot against the greenback as it remained bearish for 4 weeks in a row. However, it appears that things have changed a little bit as the GBP finally managed to close a positive week after big losses.
According to experts, the GBP resilience might not last for long since the higher interest rates in the USA are here for much longer than initially expected. In addition, the Jackson Hole Symposium is also scheduled for the week ahead, which will lend support to the greenback.
US Dollar Dominates Its Peers
If we sum up last week's FX trading, it would be the domination of the greenback. For most of the week, the dominant theme was risk aversion which further intensified after the worries about economic growth in China. Similarly, the Fed's commitment to keep the rates at higher levels is also affecting the GBP & other currencies.
At the same time, the Pound Sterling is now also showing a little bit of strength as there's now a higher chance of more tightening from the central bank. According to the market players, the BoE has the ability to introduce more rate hikes when compared with the Fed.
So on that front, there's a high chance that we might see a turnaround in the GBP/USD, which suffered from losses in the last few months.
If we look at the technicals of GBP/USD, it appears that the 1.2780 resistance is very critical as the 50 SMA and the 21 SMA are very close to it. Furthermore, the 14-period RSI continues to linger below 50, which is an indication of more downward bias in the GBP/USD.
So if the current technical outlook is indeed true, it means more decline for the GBP as the sellers will push the GBP/USD towards 1.2487. After that, the most obvious target for the GBP sellers will be the 1.2400 support zone.