- GBP / USD sellers are looking to enter below the critical support of the 21-day SMA.
- Tuesday’s Doji candle suggests that bears may be losing their conviction.
- The focus of attention shifts to economic data for the United Kingdom and the United States.
GBP / USD is on the defensive around 1.3660 at the start of the European session on Wednesday. The decline appears limited for the pair, thanks to upbeat market sentiment and a weaker US dollar.
Investors are looking forward to the final UK services PMI, US ADP employment data and ISM services PMI data for further momentum. Furthermore, the focus remains on the development around Brexit issues and the US stimulus talks.
From a technical perspective, the bulls have managed to defend the critical 21-day moving average, now at 1.3648, so far this Wednesday. The price fell below this level on Tuesday, but recovered before the close.
Meanwhile, the Doji candle formed on the daily chart the day before could be hinting at seller exhaustion, especially after a three-day bearish streak.
Therefore, sterling bulls will remain hopeful as long as the price remains above the 21-day SMA. GBP / USD could probably retest Tuesday’s high at 1.3710.
The RSI remains flat above the midline near the 52 level, which could offer some support to the bulls.
However, a daily close below the 21-day SMA could trigger a sharp decline towards the support of the up-sloping 50-day SMA at 1.3535. Keep in mind that the price has not closed below the 21-day SMA since January 11.
GBP / USD daily chart
GBP / USD technical levels
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