The GBP/USD dropped further on Friday following the release of US economic data and bottomed at 1.1927, the lowest level in a week, and slightly above the monthly low.

The weekly chart shows the price testing the 20-week moving average, after being unable to recover above the 20-day moving average at 1.2120. It is falling for the third consecutive day.

Should the pair yield a daily closing below the critical support around the 1.1940 level, where the 100 and 200 DMAs (Daily Moving Averages) converge, a sharp sell-off toward the 1.1900 round figure will be in the offing. Further south, the 2023 low of 1.1841 will be next on sellers' radars. The GBP/USD needs acceptance above the 1.2150 static resistance and the 50-day DMA to initiate a fresh recovery toward 1.2200.

In addition, the 100 and 200-day SMAs are meeting in a nexus of support just below price in the 1.1920-30s, and any moves down will likely meet demand at that level, suggesting downside may be limited. Even if they are broken, the range floor at 1.1850 is likely to provide a further backstop to any runaway bear moves. To the upside, meanwhile, the 50 DMA at 1.2145 is likely to provide similar resistance.It’s worth noting, however, that the bearish MACD signals and the steady RSI (14) keep the GBP/USD sellers hopeful.

On the contrary, a three-week-old descending resistance line restricts immediate Cable moves near 1.2140, a break of which could quickly propel the pair towards the mid-February swing high of near 1.2270.

Following that, multiple tops marked around 1.2450 will be crucial to watch for the GBP/USD buyers.

DEMA200 and high liquidity zone to act as support to GBPUSD

Feb 24 2023