GBP/USD Price Analysis: Sterling Soars Towards 1.2700 as US Dollar Falters

George Solotarov
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GBP/USD Price Analysis: Sterling Soars Towards 1.2700 as US Dollar Falters

The Pound Sterling (GBP) is making significant gains against the US Dollar (USD) as US Treasury bond yields stagnate and the Greenback retreats to a two-day low. The GBP/USD pair has climbed to 1.2691, marking a 0.40% increase, as the US Dollar Index (DXY) dips below the 105.50 level.

Technical Outlook: GBP/USD Momentum Shifts, Downside Risks Emerge

Despite the recent surge, the daily chart paints a neutral to slightly bearish picture for the GBP/USD pair. While currently trading above the daily moving averages (DMA), the Relative Strength Index (RSI) has turned bearish, indicating a potential shift in momentum towards the sellers.

If the GBP/USD fails to hold above 1.2700, the pair could be vulnerable to further declines. Key support levels to watch include the 100-DMA at 1.2643, followed by the 50-DMA at 1.2627. A deeper retracement could see the pair test the 1.2600 psychological level and potentially the 200-DMA at 1.2553, opening the door for a drop towards 1.2500.

Upside Potential Limited, But Not Ruled Out

While the current outlook suggests downside risks, a break above 1.2700 could trigger a short-term rally towards 1.2750. However, given the overall technical picture and the prevailing market sentiment, this scenario seems less likely in the near term.

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