The GBP/USD pair has seen a significant decline recently, reaching a new four-week low of 1.2656 amid risk aversion in the market. This downward movement has been driven by political turmoil in Europe, causing the Euro to weaken against the Swiss Franc as well. At the time of writing, the GBP/USD pair was trading at 1.2683, showing a 0.62% decline from the previous trading session.
Looking at the technical analysis, the GBP/USD pair has shifted to a more neutral to downward bias, indicating that sellers are gaining momentum. The Relative Strength Index (RSI) has fallen below 50, suggesting a bearish trend, while the pair has broken the four-week low of 1.2656, potentially leading to further losses. In case the pair breaks below the confluence of the 100-day moving average and the May 3 swing high turned support at 1.2643/38, it could accelerate the downtrend and target the 50-DMA at 1.2611, followed by 1.2600 and the 200-DMA at 1.2547.
On the upside, if buyers manage to push the pair above the resistance level at 1.2700, we could see a consolidation phase between 1.2700 and 1.2750. However, the path to the upside is also facing some resistance, suggesting that further downward movement may still be in play.
In conclusion, the GBP/USD pair has experienced a notable decline, reaching a new four-week low of 1.2656 amidst risk aversion in the market. The technical outlook indicates a bearish momentum, with potential support levels at 1.2643/38, 1.2611, and 1.2547. If the pair manages to break above the 1.2700 resistance level, we could see a consolidation phase, but the path to the upside is facing resistance as well. Investors will be closely monitoring the market dynamics to gauge the next potential movements of the GBP/USD pair.
