Gbpusd Trades Below 12050 Amid Usd Strength

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Gbpusd Trades Below 12050 Amid Usd Strength

GBP/USD Trades Below 1.2050 Amid USD Strength

The GBP/USD pair has gone on the back foot after the release of the inflation data from the UK and USA. The inflation data from the UK showed that it is indeed slowing down, which was a sign that high-interest rates are not here to stay for long.

Meanwhile, the retail sales from the USA side showed that it is slowing down, but the pace is much slower. As a result, the USD gained the upper hand against other currencies, including the GBP.

Overall, the GBP has turned bearish while the USD has turned bullish - This has created the perfect conditions for the GBP/USD to start trading in the negative territory! At the time of writing this, GBP/USD was already trading below the 1.2050 level.

RSI Indicator Reveals More Downside Is Ahead

On the 4-hour chart, the GBP/USD is still above its 50 SMA, but the RSI indicator continues to remain below the 50 level. This is an indication that the bears still hold the ground, and there could be more downside ahead.

Looking ahead, the area between 1.2075 - 1.2070 is an important support area. In fact, the same area also corresponds with 61.8% Fib retracement and the 50 SMA.

This means that bulls will have to keep an eye on that level - A close below that would mean that bears have the upper hand. On the contrary, a strong close above 1.2075 means the GBP bulls are back in the game. In case of more upside in GBP/USD, the next target for the bull will be around the 1.2200 region.

To conclude, the current technical outlook of GBP/USD tells us that the near-term bias is bearish and a close below 1.2070 on the 4-hr chart will lead to further downside.

Another factor that's putting pressure on the GBP/USS is the 3.8% yield of the 10-year US bonds. The current yield is at the multi-year highest levels and is thus giving strength to the US Dollar.

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