GBP/USD Price Analysis: Drops amid UK recession fears post BoE rate hike

• GBP/USD experiences dip, shedding 0.17% following BoE’s surprise 50 bps rate hike.
• Technicals suggest a downward trend, with RSI exiting overbought conditions.
• Key levels to watch: support at a weekly low of 1.2691 and resistance at a YTD high of 1.2848.

GBP/USD opened the Asian session with a  bearish mood after hitting a weekly high of 1.2841 to see those gains evaporate as UK recession fears reignited, post the Bank of England 50 bps rate hike. The GBP/USD closed on Thursday with losses of 0.17%. At the time of writing, the GBP/USD exchanges hands at 1.2742.

Must read: GBP/USD dives following unexpected BoE rate hike, sparking UK’s recession concerns

GBP/USD Price Analysis: Technical outlook

The GBP/USD remains upward biased, and the dip towards the 1.2720 area opened the door for buyers to re-enter at a lower price level. Nevertheless, the Relative Strength Index (RSI) exited overbought conditions, which triggered a sell signal, though it’s pending breaking support of the weekly low at 1.2691.

If GBP/USD drops below the latter, the next support would be the 20-day Exponential Moving Average (EMA) at 1.2635, followed by the psychological 1.2600 price level. Once cleared, the next support would be the confluence of the June 13 daily low and the 50-day EMA at 1.2499-1.2522.

Failure to drop below the weekly low, the GBP/USD would be set to re-test the 1.2800 figure. The next stop will be the year-to-date (YTD) high at 1.2848 before reaching 1.2900.

GBP/USD Price Action – Daily chart