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The British pound currency has continued to fall against the US dollar after more rate hikes from the United Kingdom central bank pushed sterling towards the 1.2100 level.
Additionally, the UK is facing economic stress and the prospect of health strikes across the country. So it can be said the mood has turned dark towards the GBPUSD pair.
Additionally, cross pair pressure also weighs on the British pound. The rising EURGBP pair is causing the British pound to generally underperform also.
The fact that the GBPUSD pair has sunk so much over the last few days also hints that the GBPUSD pair has rewound from overbought technical conditions.
Speaking of the technicals, bearish MACD price divergence is also predicting the GBPUSD pair could start to fall well below the 1.2000 support level soon.
The ActivTrader platform also shows that the traders are bullish. The Market Sentiment tool highlights that 61 percent of traders are currently long sterling.
Typically, this is a bearish sign as we look to fade traders one-way sentiment. While it’s not so high, it’s still a potential bearish sign for GBPUSD.
GBPUSD Short-term Technical Analysis
Looking at the four-hour time frame, clear price range breakout has emerged for sterling, with the break happening above the 1.2200 level.
Bearish divergence and a head and shoulders pattern is also seen. According to the overall size of the bearish pattern I would expect that we could soon see a 200-point breakout once we clearly move under the 1.2150 level.
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GBPUSD Medium-term Technical Analysis
According to the daily time frame it shows that that GBPUSD pair is starting to move towards a rising wedge pattern. If a break under the wedge happens then all hell could break loose.
According to the technical analysis a break under 1.2000 and the long-term trend is once again bearish. As mentioned early, this is a very important wedge pattern, and a potential bearish development.
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