- GBP / USD is struggling to capitalize on the positive intraday move beyond the 100 hourly SMA.
- The neutral technical setup warrants caution before opening aggressive directional positions.
GBP / USD has built on the previous day’s solid bounce, from close to the 1.3800 level at weekly lows, during the European session on Wednesday. The pair has jumped back above the 1.3900 level, although it has not been able to capitalize on the momentum or find acceptance above the 100 hourly SMA.
Any subsequent bullish movement is likely to face stiff resistance near a short-term downtrend line extending from the nearly three-year highs hit on February 24. The mentioned barrier is close to the 1.3940-50 region and should now act as a fundamental point for short-term investors.
Meanwhile, the technical indicators on the hourly / daily charts have been struggling to gain significant traction, but remain just above positive territory. That said, the lack of subsequent buying warrants some caution for the bulls ahead of the FOMC’s monetary policy decision.
This, in turn, makes it prudent to wait for a sustained move past trend line resistance before confirming that the recent corrective decline is over and the pair has positioned for future gains. The GBP / USD could then make another attempt to conquer the psychological level of 1.4000.
Subsequent strength beyond the monthly highs, around the 1.4015 region, has the potential to push the GBP / USD pair to the intermediate hurdle of 1.4060-65 on its way to the 1.4100 level. Momentum could extend further towards the recent daily highs around the 1.4135-40 region.
On the other hand, any significant drop below the 1.3900 level is likely to find some support near 1.3850. This is followed by lows the day before, around the 1.3810 region, which if decisively broken will set the stage for an extension of the recent corrective slide from multi-year highs.
GBP / USD 1 hour chart
GBP / USD technical levels
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