GBP/USD Price Analysis: Drops below the 100-DMA as bears eye 1.2000

• Since last Thursday, the GBP/USD has lost more than 3% as the US Dollar strengthened.
• GBP/USD Price Analysis: Daily close below the 100-DMA would exacerbate a test of 1.2000.

The Pound Sterling (GBP) capped its fall against the US Dollar (USD) on Monday at around the 100-day Exponential Moving Average (EMA) at 1.2028, though the GBP/USD remains below the latter. That said, a GBP/USD daily close would keep bears hopeful of testing the 1.2000 figure. At the time of writing, the GBP/USD hovers around 1.2024 after hitting a daily high of 1.2077.

GBP/USD Price Analysis: Technical outlook

Since last Thursday, after the Bank of England (BoE) raised rates by 50 bps, lifting the Bank Rate to 4%, the GBP/USD collapsed by 1.20%. Then it was followed by last Friday’s US jobs data, which exerted downward pressure, sending the GBP/USD into a tailspin, plummeting more than 150 pips in the session toward the 1.2050 area.

All that said, the technical outlook is tilted to the downside. Oscillators like the Relative Strength Index (RSI) and the Rate of Change (RoC0 turned bearish. The latter shows that sellers are gathering strong momentum, posing a threat to crack the psychological 1.2000.

If the GBP/USD breaks below 1.20, that would open the door for further downside. Once cleared, GBP/USD’s next support would be 1.1900, followed by a two-month-old upslope trendline that passes at around 1.1880-1.1900 and then the YTD Low at 1.1841.

GBP/USD Key Technical Levels