- GBP / USD faces a rejection just below 1.39 as the US dollar rallies.
- Brexit concerns weigh on the pound, although the 50-hour SMA comes to the rescue.
- The RSI sees a new rally, but remains below 50.
GBP / USD is attempting a bounce from daily lows near 1.3835, returning more than half of the post-NFP move to multi-week highs.
The selling tone around GBP / USD comes from resurgent demand for the US dollar across the board. Meanwhile, looming Brexit concerns between the UK and the European Union over the Northern Ireland protocol also weigh on the British pound.
However, the pair has stopped its decline in the last hour, finding support in the appetite for risk in the markets.
From a short-term technical perspective, GBP / USD has found strong buying at the 50 hourly moving average at 1.3837.
If the bulls manage to defend this level, then the bounce could extend towards the 21 SMA at 1.3859.
Higher up, a further advance towards Friday’s high of 1.3891 cannot be ruled out.
GBP / USD 1 hour chart
Nevertheless. the RSI continues to trend below the midline, despite the latest rally. This suggests that the pair remains at risk of continuing lower.
An hourly close below the 50 SMA is critical to extend the recent correction, with 1.3800 being the next target for sellers. At that level, there is also the SMA 100.
Further down, the next relevant support is at the 200 SMA at 1.3770.