Key Support Breach Signals Bearish Trend for GBP/USD
02 August 2024
Yesterday, the British Pound to American Dollar (GBP/USD) experienced a crucial moment but failed to capitalize on it. Despite the Bank of England's interest rate decision aligning with expectations—a 25 basis point cut—the British Pound did not see an increase in demand. Initially, the price seemed to be bouncing off a long-term uptrend line marked with orange, staying within a bullish flag pattern indicated by red lines. This flag suggested a potential upside breakout, but the buyers couldn't sustain the momentum.
The pivotal area was the green rectangle on the chart, which represented a crucial support level. Defending this region was essential for maintaining a bullish outlook. However, the buyers' failure to hold this support led to a significant price drop. The long-term uptrend line and the lower line of the flag were breached, signaling a shift in sentiment.
With the breakdown of these key supports, the sentiment for GBP/USD has turned negative. The failure to uphold the support levels marks a long-term signal to sell. The outlook for the British Pound now hinges on whether it can find new support or if the bearish trend will continue.