The GBP/USD pair dropped to near 1.2700 during the early European session on Monday, weighed down by a broadly stronger US Dollar (USD). Factors including US President-elect Donald Trump’s tariff threats, escalating geopolitical tensions in West Asia, and increasing expectations for a less aggressive stance on Federal Reserve rate cuts have supported the USD, contributing to downward pressure on the British Pound.
The focus on Monday shifts to the upcoming release of the US ISM Manufacturing Purchasing Managers Index (PMI), which could provide further direction for USD and, in turn, impact the GBP/USD pair.
From a technical perspective, the bearish outlook for GBP/USD remains intact, with the pair trading below the critical 100-day Exponential Moving Average (EMA) on the daily chart. The 14-day Relative Strength Index (RSI), hovering just below the midline at 44.40, reinforces the negative momentum.
Initial support for GBP/USD is seen at the psychological 1.2600 level. If bearish sentiment persists, the pair could extend losses toward the lower boundary of the Bollinger Band at 1.2445, with a potential break lower leading to the April 23 low of 1.2331.
On the upside, resistance is first encountered at 1.2834, the low of November 6. A sustained rally above this point could pave the way for a test of the 1.2890-1.2900 zone, including the 100-day EMA. However, the psychological barrier at 1.3000 and the upper limit of the Bollinger Band are expected to present significant challenges for any bullish move.
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