In early European trading on Tuesday, GBP/USD was around 1.3200, marking a slight consolidation following a strong rebound from a recent five-week peak of 1.3276.
The overall strength of the US dollar (USD) has led to growing expectations that the Bank of England (BoE) might lower its key interest rate during its monetary policy meeting scheduled for December 18. This situation continues to exert bearish pressure on the British pound (GBP).
Without any significant economic updates from either side of the Atlantic to influence the market on Tuesday, traders seem to be overlooking the UK’s Autumn Budget relief, as central bank expectations are still dominating sentiment.
Looking at short-term technical indicators, the daily chart reveals that the 21-day simple moving average (SMA) is showing a slight upward trend, although the longer-term 50-day and 100-day SMAs are still on a downward trajectory.
Despite a minor uptick in the 200-day SMA, the price remains below the 50-day, 100-day, and 200-day averages, even as it stays above the 21-day line. The Relative Strength Index (RSI) stands neutral at 51.47, indicating that momentum appears to be stabilizing after the recent surge.
Initial support is observed at the 21-day SMA, currently at 1.3149, while first resistance is near the 50-day SMA at 1.3270. If the price manages to close above this resistance level, it could signal a reduction in bearish pressure.
For now, the short-term SMA is still trailing behind the long-term SMA, which strengthens the bearish outlook until it can overcome this higher moving average barrier. The 200-day SMA is pointing upwards at 1.3318 whereas the 100-day SMA is declining at 1.3370, creating an overhead resistance zone that is likely to hinder any recovery attempts. There are no strong signs of an overbought condition with the RSI near 51, and a decisive break above the 200-day SMA could lead towards the 100-day gauge, but failing to breach the immediate support might empower sellers.
