Sterling closed the week slightly lower against the US dollar, down -0.2% after a two-week period of gains. The GBP/USD currency pair will be closely watched in the second week of May, especially before Tuesday’s release of UK employment and wage data. Technical analysis suggests a potential bearish move in the near future.
Looking at the long-term outlook, the monthly chart shows resistance at $1.2715 since late 2023. The daily chart also indicates resistance with a descending line from the high of $1.2894 and a horizontal level at $1.2527. While there are signs of an uptrend on the monthly chart, breaking the high at $1.3142 is crucial to confirm a long-term uptrend. The monthly support level at $1.2173 is seen as a possible downside target for GBP bears, supported by the daily chart’s downtrend.
In the short term, the H1 timeframe shows resistance at $1.2530 and potential resistance levels at $1.2583-$1.2560. Given the overall bearish trend, sellers may target the $1.25 level, followed by support levels at $1.2459 and $1.24.
The charts also indicate that the Relative Strength Index (RSI) is testing resistance, adding to the bearish sentiment. Overall, the GBP/USD pair may face downward pressure in the coming days.