POUND STERLING ANALYSIS & TALKING POINTS

• UK housing prices strengthen slightly since November.
• Muted day expected final trading day of 2023 may provide some volatility.
• GBP/USD eyes rising wedge break.

GBPUSD FUNDAMENTAL BACKDROP

TECHNICAL ANALYSIS

GBP/USD DAILY CHART

Chart prepared by Warren Venketas, IG

GBP/USD price action is more interesting than and contains several technical indications. Short-term there is a forming rising wedge (dashed black line) although the wedge is not typical in its positioning (downtrend), a break below wedge support could see the pattern unfold as per normal. The Relative Strength Index (RSI) is declining off overbought levels with corresponding prices ticking higher, reflecting bearish/negative divergence that could suggest subsequent downside to come. Bulls are also approaching long-term symmetrical triangle resistance (black) around the 1.2848 swing high which does not rule out further upside.

Key resistance levels:

• 1.2900
• Triangle resistance
• 1.2848
• Wedge resistance

Key support levels:

• 1.2764
• Wedge support
• 1.2613

MIXED IG CLIENT SENTIMENT (GBP/USD)

IG Client Sentiment Data (IGCS) shows retail traders are currently net SHORT on GBP/USD with 51% of traders holding SHORT positions (as of this writing).

https://www.dailyfx.com/news/forex-gbp-usd-price-forecast-fading-bullish-momentum-for-pound-wv-20231229.html