GBP/USD: Bearish Momentum Continues, Watch for Oversold BounceThe British pound fell to a new record low against the US dollar on Wednesday, October 18, 2023, after the Bank of England raised interest rates by 0.75 percentage points, but signaled that it may slow the pace of hikes in the coming months. This suggests that the BoE is more concerned about a recession than about inflation, which could lead to further weakness in the pound.
Other factors weighing on the pound include the ongoing political uncertainty in the UK and the prospect of a prolonged economic slowdown. The UK economy is already facing a number of headwinds, including high inflation, rising energy costs, and labor shortages. A recession in the UK would likely lead to a further weakening of the pound.
Technical Analysis
30-Minute Chart
On the 30-minute chart, GBP/USD is currently trading in a bearish downtrend. The price is below the 20-period and 50-period moving averages, and the MACD indicator is below its signal line. This suggests that the bears are in control and that the price is likely to continue to fall in the near term.
The next support level is at 1.2100, followed by 1.2050. The next resistance level is at 1.2250, followed by 1.2300.
4-Hour Chart
On the 4-hour chart, GBP/USD is also trading in a bearish downtrend. The price is below the 20-period and 50-period moving averages, and the MACD indicator is below its signal line. This suggests that the bears are in control and that the price is likely to continue to fall in the near term.
The next support level is at 1.2100, followed by 1.2050. The next resistance level is at 1.2250, followed by 1.2300.
Daily Chart
On the daily chart, GBP/USD is also trading in a bearish downtrend. The price is below the 20-period and 50-period moving averages, and the MACD indicator is below its signal line. This suggests that the bears are in control and that the price is likely to continue to fall in the near term.
The next support level is at 1.2100, followed by 1.2050. The next resistance level is at 1.2250, followed by 1.2300.
Elliot Wave Theory
Based on Elliot Wave Theory, GBP/USD may be in wave 5 of a bearish 5-wave Elliott wave pattern. This suggests that the price is likely to continue to fall until the wave 5 pattern is complete.
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