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29/08/24
115
GBP/USD Shows Recovery Signs Amid Weakening US Dollar
The British Pound is gradually showing signs of recovery against the U.S. Dollar, which is currently experiencing a downturn. Traders are closely watching for new direction as anticipation builds around the release of the second estimate of the US Q2 Gross Domestic Product (GDP). A bullish sentiment is apparent for the Pound, as technical indicators suggest an upward trend is possible on the four-hour chart.
GBP/USD has been steadily approaching a 29-month high, recently recorded at 1.3266. This movement is largely influenced by a renewed decline in the U.S. Dollar, coinciding with market reactions to disappointing earnings guidance from Nvidia, a major player in the American AI sector. Additionally, differing monetary policy perspectives between the US Federal Reserve and the Bank of England continue to support the bullish outlook for GBP/USD.
The potential for further gains hinges on several factors, including the release of the upcoming GDP figures and the Sterling’s performance in relation to the 21-Simple Moving Average (SMA) on the four-hour chart, currently situated at 1.3210. A decisive move above this SMA is critical for GBP/USD to target the psychological barrier at 1.3250. Successfully overcoming this level could lead to renewed buying interest, propelling the exchange rate toward the two-year high of 1.3266, with aspirations to reach the 1.3300 level.
Conversely, if GBP/USD struggles to maintain its position above the 21-SMA, it may invite selling pressure, potentially retreating towards the 50-SMA situated at 1.3120. The Relative Strength Index (RSI) is currently trending upwards near the 60 level, indicating that the recovery could persist despite any near-term fluctuations in the currency pair.
The British Pound has also demonstrated strength against various major currencies today, particularly the Japanese Yen, reflecting broader market dynamics at play in the forex landscape.
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