- GBP/USD witnessed some aggressive selling on Thursday amid relentless buying interest in the USD.
- The formation of a descending channel supports the prospects for a further short-term depreciation move.
- A slightly oversold RSI on the daily chart suggests that the bears could pause near 1.1700.
The pair GBP/USD added to its heavy intraday losses and fell to its lowest level since March 2020, below 1.1800 in the last hour. The incessant buying of US dollars accelerated during the early American session, which, in turn, was seen as a key factor behind the latest leg lower.
From a technical point of view, Wednesday’s recovery attempt failed near the confluence resistance 1.1965-1.1970. This region comprises the upper end of a descending channel from two and a half weeks ago and the 50-period SMA on the 4-hour chart. The subsequent drop could be seen as a further trigger for the bears and supports the prospects for an extension of the ongoing depreciation move.
Therefore, some follow-through weakness to challenge descending channel support around the 1.1700 round level remains a distinct possibility. That said, the RSI (14) on the daily chart is already showing oversold conditions. This, in turn, suggests that the bears could pause near such support, which could spark some short-term short-covering moves around the GBP/USD pair.
However, any recovery attempts could face stiff resistance near 1.1800. This is followed by resistance near the 1.1830-1.1835 area, above which the GBP/USD pair could aim to reclaim the 1.1900 round figure. Any further move higher could be seen as a selling opportunity and risks fading quickly near the aforementioned confluence, currently around the 1.1925-1.1930 area.
GBP/USD 4-hour chart
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Technical levels
Source: Fx Street
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