- GBP / USD is in a bearish consolidation mode around 1.3650.
- The Fed’s decision focuses investors’ attention for the next big move in the pair.
- The pair draws a bearish flag on the 4-hour chart amid an oversold RSI.
GBP / USD is pressing daily lows near the 1.3650 region, while the US dollar remains relatively firmer at the start of the European session on Wednesday amid rising Treasury yields and S&P 500 futures.
Markets have calmed down on the positive news around Evergrande as investors await the Fed’s decision for the next price direction. However, the US dollar is likely to remain in a win-win situation despite the Fed refraining from hinting at a reduction in its bond purchases, as risks in China continue to persist.
Technically, GBP / USD is within a bearish flag on the 4-hour chart, with a sustained move below the uptrend line support at 1.3651 likely confirming the bearish continuation pattern.
A break to the downside could open the doors to the round 1.3600 level, with a test of the pattern target at 1.3528 remaining on the table for the near term.
The RSI is entering the oversold territory, which suggests there is some room left for GBP bears to flex their muscles.
Adding credibility to further weakness, the 50-period SMA has crossed below the 200 SMA, validating a death crossover in that time frame.
GBP / USD 4 hour chart
On the other hand, GBP / USD bulls need to find a strong foothold above the daily highs of 1.3678, in order to initiate a significant recovery towards 1.3700, where the bearishly sloping 21 SMA is located.
If the recovery holds, a test of the 1.3750 level would be inevitable.
GBP / USD additional levels
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