GBP/USD Under Downside Pressure, Support Tested

GBP price, news and analysis:

• GBP/USD is testing support from a trendline that marks the lower boundary of a rising channel in place on the chart since January 11.
• A ‘risk off’ move in the markets has led to a flow of money from other currencies into the safe-haven US Dollar and that could provide the catalyst for a break lower.

GBP/USD under downward pressure

GBP and other currencies are falling against the US Dollar Thursday as a deterioration in sentiment leads to another flow of money into the safe haven USD. For GBP/USD, much will depend on whether and when confidence returns but in the near-term the pair is again testing trendline support and, if it breaks, further near-term losses can be expected.

GBP/USD Price Chart, One-Hour Timeframe (December 30, 2020 – January 28, 2021)

Source: IG (You can click on it for a larger image)

The trendline currently checks in around 1.3630 and any fall below there could easily take GBP/USD down to 1.36. Note though that the trendline has been tested before and each time it has held. If that happens again there could be a swift move back to 1.37 and above.

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From a fundamental perspective, there has been little news to explain why sentiment has deteriorated in the markets generally but it could be seen as a healthy correction lower that will be followed by further gains for stocks and currencies like GBP, AUD, NZD and CAD.

We look at currencies regularly in the DailyFX Trading Global Markets Decoded podcasts that you can find here on Apple or wherever you go for your podcasts

— Written by Martin Essex, Analyst

Feel free to contact me on Twitter @MartinSEssex