- GBP / USD witnessed some selling on Friday and trimmed a portion of the night’s strong gains.
- This week’s strong recovery from levels below 1.3600 stalled near the resistance of the 200 hourly SMA.
- A sustained move beyond the aforementioned barrier is needed to support the prospects for higher earnings.
The pair GBP/USD it extended its steady intraday decline during the first half of the European session and fell to fresh daily lows, around the 1.3725 region in the last hour.
Rising COVID-19 infections in the UK, coupled with the stalemate over the Northern Ireland Protocol to the Brexit deal, acted as a headwind for the British pound. Intraday selling accelerated following the disappointing release of UK PMI impressions for July, forcing GBP / USD to trim a portion of overnight gains to weekly highs.
From a technical perspective, the GBP / USD struggled to capitalize on this week’s solid bounce from levels below 1.3600, or the lowest level since February, and faced rejection near the 200 hourly SMA. The mentioned barrier is currently pegged near the 1.3760 region and is followed by the swing highs overnight around the 1.3775-80 area.
A sustained move further will be seen as a new trigger for bull traders and will set the stage for additional gains. The GBP / USD pair could then break above the 1.3800 level and accelerate the momentum towards the intermediate resistance 1.3840-50. Momentum could extend further and allow the bulls to rally to the 1.3900 level.
On the other hand, 1.3700 is likely to protect the immediate slide ahead of the 1.3670-65 horizontal zone. A convincing break below has the potential to drag GBP / USD towards 1.3600 en route to monthly lows around the 1.3570 region. Some subsequent sales will expose the key psychological level of 1.3500.
1 hour chart
Technical levels
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