- Summary:
- A sudden surge in USD demand in the New York session has caused the GBP/USD to tumble towards 1.3800, on the back of declining buying momentum.
Unable to break beyond the 1.4000 psychological resistance level on the back of declining tops, the GBP/USD slumped towards 1.3800 in the New York session, as the greenback saw sudden demand.
A rise in a key inflation metric used by the US Federal Reserve in determining monetary policy triggered the demand on the greenback. Furthermore, the Chicago PMI number came in at 72.1, which beat the consensus and previous figures of 65.4 and 66.3, respectively.
The GBP/USD is down 0.82% as of the time of writing.
Technical Outlook for GBP/USD
The active daily candle has violated the 1.38616 support and the ascending trendline that connects recent lows from 12 April till date.
However, the candle has bounced off the 1.38126 support line. A further price decline requires that bears blow out the support, opening the door for 1.37463 and 1.36771 to come into the picture as immediate downside targets. A breakdown of 1.36771 allows the pair to hit 3-month lows at 1.36117.
On the flip side, if the bulls pick up momentum from the intraday bounce at 1.38216, we could see price retest the 1.38616 resistance, with a break of 1.39484 being required for price to retest the 18 March/20 April highs at 1.40051. Only a break of this level to the upside restores the uptrend, clearing the pathway towards 1.41535.
GBP/USD Daily Chart
