- A dovish USD demand helps GBP / USD gain some positive traction on Thursday.
- The lack of continuation buying suggests that the recent slump is still far from over.
- The pair still looks vulnerable to break below the 1.3400 level and test 1.3350.
GBP / USD is moving higher on Thursday, although it is struggling to capitalize on the attempted recovery beyond the 1.3450 region. The pair is moving with modest intraday gains and remains close to the annual lows touched on the previous day.
The US dollar has consolidated its recent strong gains to the highest level since September 2020. This, coupled with an upward revision of the UK GDP growth figures for the second quarter, has offered some support to the British pound and it has provided a modest rise to the GBP / USD pair.
However, expectations of an early tightening of monetary policies by the Fed have continued to act as a tailwind for the USD. Apart from this, the current fuel crisis in the UK has done further to limit any significant gains for the GBP / USD pair, at least for now.
From a technical perspective, this week’s sustained break below strong horizontal support at 1.3600 was seen as a key trigger for bears. That said, slightly oversold conditions on the short-term charts have prevented investors from opening new bearish positions around the GBP / USD pair.
However, the bias remains firmly in favor of the bears and supports prospects for an extension of the recent move to the downside. From current levels, GBP / USD looks vulnerable to breaking below the round 1.3400 level and testing the next relevant support near 1.3350.
On the other hand, any significant rally is likely to face stiff resistance near the key psychological level of 1.3500. A sustained move above this region could trigger a short covering move, although any subsequent move to the upside is more likely to remain limited near the support breakout point at 1.3600.
GBP / USD daily chart
GBP / USD technical levels
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