Gbpusd Shows Weakness

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Gbpusd Shows Weakness

GBP/USD Shows Weakness Near The 1.22 Handle

The GBP/USD stays under pressure as it trades near the 1.2200 handle during the 2nd day of the week. The current situation of the GBP/USD can be attributed to the wage inflation data released earlier. As per the data, a reduction was seen in wage inflation during the month of August.

The GBP/USD 4-hour chart suggests that the RSI indicator is still below the middle line (50), which means the bears are still in charge. Furthermore, support is also present at the 1.2130 level, which will provide a pause to the GBP/USD if it declines lower.

1.200 Support Awaits The GBP/USD

Next up is the 1.21 support, and then the 1.2050 level is present for the GBP/USD traders. In the short term, the risk for the GBP/USD is skewed toward the downside, given the macroeconomic conditions.

On the upside, the resistance is present near the 1.2200 and the 1.2210 levels. These levels also coincide with the 50 SMA, 100 SMA, and 23.6% fib retracement levels as well. In a sense, we can say that the GBP/USD is very close to various resistance levels (dynamic & horizontal).

In the last 2 days, the Pound/Dollar pair has also shown bearish pressure as it closed in the red. On Monday, the pair managed to stage a small rally, but even that failed to gain any momentum.

Overall, the current atmosphere of the market is 'risk averse,' which is the main reason behind the weakness shown by the GBP/USD. In a sense, it has little to do with the USD strength or the GBP weakness but more to do with the geopolitical situation on the ground.

In addition, a report released by the University of Michigan suggests that yearly inflation will go higher. So that's a factor that is also lending support to the USD, as evident from the GBP/USD price action. After the report, there's now a 67% chance of one last rate hike in December before the year ends.

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