Market Analysis

The GBP/USD pair weakened to around 1.2910 during the early European session on Monday, as the stronger US Dollar (USD) following Donald Trump’s election victory continues to weigh on the pair.

Traders expect that inflationary pressures will prevent the US Federal Reserve (Fed) from reducing rates as much as anticipated.

Meanwhile, the Bank of England (BoE) maintained its stance, emphasizing that a gradual approach to removing policy restraint remains appropriate, and that monetary policy will need to remain restrictive for a sufficient period.

These less dovish comments from the BoE could help limit the British Pound’s losses in the short term.

Looking at the daily chart, GBP/USD maintains a bearish outlook, with the price staying below the 100-day Exponential Moving Average (EMA).

The downward momentum is supported by the 14-day Relative Strength Index (RSI), which is below the midline at 43.85, suggesting further downside movement.

The initial support for GBP/USD is seen at 1.2875, the low from November 7, with further support in the 1.2850-1.2840 range, which aligns with the lower boundary of the Bollinger Band and the low from October 31. On the upside, the 100-day EMA at 1.2983 provides immediate resistance, with the key psychological level at 1.3000. A strong break above this level could lead to a rally towards 1.3048, the high from November 6.

Paraphrasing text from "FXSTREET"all rights reserved by the original author.