GBPUSD Update Before Non-Farm Payrolls

As price has traded below the April 2024 low at 1.2300 & continued lower I thought it would be timely to update the analysis. I have changed the analysis to allow for more weakness. The bullish scenario is still alive. BUT, it is wearing thin & price is getting close to 1.2037 which is the point of ruin for the bulls. This is where the bullish sequence of higher highs & higher lows in place since Oct 2023 is broken. It is similar to recent EURUSD support at 1.0448, which when broken saw price rush lower to 1.0335 as investors sold stale EURUSD long positions.

The fundamental position has changed for the worse for the UK since the Oct budget last year. GDP growth has stagnated & inflation has squeezed higher. After Chancellor Reeves produced a tax & spend budget the governments costs of servicing its debt has pushed higher & investors are concerned that the UK is entering a period of stagflation.

So, the fundamental situation is changing & being reflected in the technical analysis. It may prove beneficial to keep watching 1.2037. If price trades below that level the analysis will have to change to allow for possibly much more weakness & the bullish sequence will be broken. If the fundamental situation continues to deteriorate sterling may be bullied lower.