- GBP/USD witnessed some aggressive selling on Friday and dipped to a two-week low.
- Technical selling below 1.2100 aggravated intraday bearish pressure.
- The breakout of the downtrend channel supports the prospects for a further short-term decline.
The pair GBP/USD added to its heavy intraday losses and fell above a two-week low around the 1.2030 area in the American session.
Prospects for more aggressive rate hikes by the Federal Reserve coupled with growing recession fears boosted safe-haven demand for the US dollar and prompted further selling around GBP/USD on Friday.
The subsequent decline below a downtrend channel support from two weeks ago confirmed a further bearish breakout and supports the prospects for a further short-term downside move. The negative outlook is reinforced by the fact that the bearish technical indicators on the daily chart are still far from oversold territory.
However, the RSI (14) on the 4-hour chart is already showing oversold conditions and warrants some caution for the aggressive bears. However, the GBP/USD looks poised to extend the bearish trajectory and challenge the psychological 1.2000 mark before eventually falling to a year low around the 1.1935 area.
On the other hand, the support point of the ascending channel mentioned above, around the 1.2085 region, now seems to act as immediate resistance ahead of 1.2100. Any move higher could be seen as a selling opportunity near the 1.2140-1.2150 area. This, in turn, should cap GBP/USD near the 1.2180-1.2185 offering zone.
GBP/USD 4-hour chart
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Technical levels
Source: Fx Street
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