GBP/USD (daily chart) has approached a full week of general decline that has brought the currency pair down well below its 50-day moving average. Current price action reached a low slightly below the key 1.6500 level to hit the 61.8% Fibonacci retracement of the last major bullish run, which ran from early February’s 1.6250 low up to mid-February’s four-year high at 1.6821. The pair has also dipped slightly below a major bullish trend line that extends back to the 1.4800-area double-bottom low in July of 2013.
The current bearishness in GBP/USD could be a precursor of further decline that could break down the steep uptrend that has been in place for the past eight months, which culminated in February’s noted four-year high. Now sitting atop key support, the currency pair is currently at a critical juncture. Further declines would be indicated on a convincing breakdown below this support area – around the 1.6475 level – which could then lead the way to a drop towards further key support around 1.6300. A drop of this magnitude should indicate a potential breakdown of the eight-month bullish trend.
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