GBP/USD Price Analysis: Facing resistance around 1.2600 and pulling back towards 1.2535

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  • The pound trims part of Monday’s gains and pulls back towards the 1.2530 area.
  • Risk aversion and weaker than expected UK PMIs weighed on GBP/USD.
  • GBP/USD Price Forecast: A daily close below 1.2600 to leave the major exposed to additional selling pressure.

Sterling went on the defensive as sentiment turned sour weighed down by weaker-than-expected UK PMIs, which dragged the major from weekly highs around 1.2600 towards the 1.2530 area. At 1.2536, the GBP/USD is paring some of Monday’s gains and is down 0.40%.

The mood remains subdued, fueled by concerns that the US economy is slipping into recession. The Federal Reserve is in a hike cycle, tightening its monetary policy, which according to money market futures, would see the Fed hike towards the 2.75-3% zone by the end of the year.

Another factor that is weighing is the Covid-19 crisis in China. Weekend reports illustrate that Beijing is struggling to limit the spread. Meanwhile, in Shanghai, which was about to lift restrictions, a new outbreak occurred, although not like at the beginning of the last episode.

On the other hand, GBP/USD opened near the daily high around 1.2600, but fell and broke below the central and S1 daily pivot points near 1.2480. However, towards the end of the European session, the major currency is making a strong move and is heading towards the 50-hour Simple Moving Average (SMA) at 1.2542.

GBP/USD Price Forecast Technical Outlook

From a technical point of view, the GBP/USD continues to have a bearish bias, despite having bounced 300 pips from the low of the year to current levels. The 1.2600 level appears to be solid resistance as GBP/USD bulls struggled twice to recapture the figure, which would have opened the door for a move higher towards the May 4 high at 1.2638. However, a daily close below 1.2600 would leave the pair vulnerable to additional selling pressure, further validated by the RSI at 48.69, within negative territory and heading lower.

That said, the first GBP/USD support would be the psychological figure at 1.2500. A break of the latter would expose the July 2020 lows near 1.2479, followed by the May 17 daily low at 1.2313 and the YoY low at 1.2155.

Technical levels

GBP/USD

Panorama
Last Price Today 1.2526
Today’s Daily Change -0.0062
Today’s Daily Change % -0.49
Today’s Daily Opening 1.2588
Trends
20 Daily SMA 1.2427
50 Daily SMA 1.2819
100 Daily SMA 1.3147
200 Daily SMA 1.3355
levels
Previous Daily High 1.2601
Previous Daily Minimum 1.2479
Previous Maximum Weekly 1.2525
Previous Weekly Minimum 1.2217
Monthly Prior Maximum 1.3167
Previous Monthly Minimum 1.2411
Daily Fibonacci 38.2% 1.2555
Daily Fibonacci 61.8% 1.2526
Daily Pivot Point S1 1.2511
Daily Pivot Point S2 1.2434
Daily Pivot Point S3 1.2389
Daily Pivot Point R1 1.2633
Daily Pivot Point R2 1.2678
Daily Pivot Point R3 1.2755

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Source: Fx Street

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