GBP/USD Price Analysis: Bulls Watch 1.2350 Closely, But May Give Up Soon

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  • The British pound has reached new all-time highs of the bull cycle thanks to the weakness of the dollar.
  • GBP/USD bulls could throw in the towel below 1.2300, although 1.2500 is also a short-term outlook.

The US dollar weakened to three-month lows against sterling on Thursday, following comments by Federal Reserve Chairman Jerome Powell that US rate hikes could be eased “as soon as December”. GBP/USD reached 1.2300 and is showing signs of exhaustion on the charts, as illustrated below:

GBP/USD daily chart

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The price has moved sharply away from trend line support and has dragged liquidity, to some extent, above the early August highs. However, this is not to say that this rally is over and there are prospects for a move towards the 1.2400 area, which would be expected to hold on early tests and potentially limit the rally.

GBP/USD H1 Charts

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However, at this juncture, there are prospects for a deep correction of the current bullish momentum towards 1.2150. On the one hand, we could see a correction moving progressively lower towards trend line support or price action that more closely resembles something like the following schematic:

Source: Fx Street

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