May 30, 2023

Bears return after 100-DMA caps the winning streak

  • GBP/USD turns south after facing rejection just below 100-DMA.
  • The US dollar’s hard bounce weighs heavily on cable this Monday.
  • UK government seeks to mitigate workforce disruption from Omicron.

GBP/USD is keeping its range around 1.3500, undermined by the US dollar’s sharp comeback amid discouraging news starting out the first trading of 2022.

Rising covid cases in the UK combined with Fed’s hawkish expectations weigh negatively on the currency pair. The UK reported 1,37,583 new covid cases in 24 hours. It had recorded 1,62,572 cases on Saturday.

Meanwhile, “the British government has asked public sector managers to test their contingency plans against a worst-case scenario of 25% staff absence as part of efforts to minimize disruption from the rapid spread of the Omicron variant of COVID-19,” Reuters reported on Sunday.

Attention now turns towards the US Markit Manufacturing PMI for a fresh trading opportunity in the major, as the UK market is closed in observance of New Year’s Day.

Looking at GBP/USD’s daily chart, the pair has failed to clear the downward-sloping 100-Daily Moving Average (DMA) at 1.3562.

Therefore, sellers have returned, knocking down the price briefly below 1.3500. If the corrective pullback from multi-week highs of 1.3550 gathers steam, then GBP bears could test Friday’s low of 1.3465.

The downtick in the 14-day Relative Strength Index (RSI) is backing the retreat in the pair, although the losses could likely be capped, as the indicator still holds above the midline.

GBP/USD: Daily chart


Alternatively, acceptance above the 100-DMA on a daily closing basis will fuel a fresh advance towards the 1.3600 level.

The next stop for GBP bulls is located at the 1.3650 psychological level.

GBP/USD: Additional technical levels


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