The British pound currency has continued to stay range bound against the US dollar and sterling has basically gravitated towards the 1.2000 level for most of the holiday period.
In the short-term, unless sterling can get back above the 1.2200 level then things look bearish and a move towards the 1.1900 or even the 1.1800 level seems on the cards.
Basically, the GBPUSD pair need to hold above the 1.2600 level in 2023 in order to have a shot at hitting the 1.3000 or 1.3600 area during that whole year.
I think the UK economy is in a tough spot, however, GBPUSD strength could be driven by overall weakness in the greenback as the FED starts to pullback on rate hikes.
Also, the 1.0500 level looks like a major low the GBPUSD pair, so we could see a new range of 1.1800 to 1.2600 next year bear a major breakout happens.
Looking at sentiment data and how traders feel about sterling, the ActivTrader Market Sentiment tool shows that traders are growing more bullish despite the recent sharp price drop.
With 58% of traders currently bullish, it should be noted that this current sentiment reading is not significant enough to be an extreme reading, as traders are now basically batting both ways.
GBPUSD Short-term Technical Analysis
Looking at the four-hour time frame, clear price range breakout has emerged for sterling, with the break happening under the Ichimoku cloud.
A bearish head and shoulders pattern is also underway. According to the overall size of the pattern, I would expect that we could soon see a further 200 point more downside in GBPUSD.
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GBPUSD Medium-term Technical Analysis
According to the daily time frame it shows that that GBPUSD pair is starting to test critical technical resistance on the Ichimoku indicator and will either break free or drop towards cloud support.
According to the technical analysis a break above 1.2200 and the long-term trend is once again bullish. As mentioned early, this is a very important development for bulls to then tackle 1.2600.
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