- GBP/USD declines from daily high of 1.2866 amid strong US labor market data.
- Technical outlook shows bearish momentum, with key support at 1.2781 (50-DMA).
- Potential further declines to 1.2682 (100-DMA) if 1.2800 and 1.2739 support levels are breached.
The Pound Sterling dropped early during the North American session after economic data from the United States (US) came stronger than expected, highlighting a modestly tight labor market. Therefore, the GBP/USD edges down some 0.20% and trades at 1.2827 after hitting a daily high of 1.2866.
GBP/USD Price Analysis: Technical outlook
The GPB/USD extends its losses after peaking at a year-to-date (YTD) high of 1.3043, with buyers unable to fight back and lift the exchange rate above the previous cycle high seen on March 8 at 1.2893. Once the pair cleared the latter, the losses continued to pile up, with market participants eyeing a test of the 50-day moving average (DMA) at 1.2781.
The Relative Strength Index (RSI) hints that momentum favors sellers. Hence, the GBP/USD path of least resistance is tilted to the downside.
If GBP/USD drops beneath 1.2800, the next stop would be the abovementioned 50-DMA, followed by the June 19 high at 1.2739. If those levels are surpassed, the next stop would be beneath 1.2700 at the 100-DMA at 1.2682, followed by the 200-DMA at 1.2633.
For a bullish correction, the GBP/USD must clear the July 29 high of 1.2888 and the July 24 peak of 1.2937 so that buyers can challenge the YTD high.
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