Is GBPUSD preparing for its next leg lower?
Watch today’s video to see the key trigger for downside targets and the latest on the US Dollar Index (DXY).
GBPUSD is once again testing its 2023 trend line support at 1.2560, the same level that attracted buyers in late November.
However, the ongoing pressure at this level, combined with the DXY rally, is looking increasingly bearish for the pound.
A daily or weekly close below 1.2560 could open the door to targets like 1.2300 and 1.2080.
For this to play out, the DXY needs a convincing break above 108.00, which would pave the way for the next leg higher toward 109.00–110.00.
Wednesday’s FOMC and Chair Powell’s messaging could provide the catalyst needed to trigger this move.
On the technical side, GBPUSD needs a confirmed breakdown below 1.2560 on the higher time frames to target levels like 1.2300–1.2400.
The next few days should be revealing, but I favor shorts while the DXY remains above 108.00.
