- GBP / USD cut a significant part of its intraday gains to the 1.3800 area.
- Rising US bond yields supported the dollar and put some pressure on the pair.
- A break below the support of the ascending channel is needed to confirm a further bearish breakout.
The pair GBP/USD it struggled to preserve its intraday gains at the 1.3800 zone and has now slipped to the lower end of its daily trading range. The pair was last seen hovering around the 1.3750 level, just a few pips above the lows touched during the Asian session.
The US dollar attracted some buying amid rising US Treasury yields, bolstered by expectations of an early policy tightening by the Fed. This, in turn, was seen as a key factor which triggered new selling around the GBP / USD pair and led to the intraday decline.
The slide dragged the GBP / USD pair towards key support marked by the lower bound of a one-month descending channel. A convincing break below will set the stage for an extension of the recent rejection drop from the very important 200-day SMA.
Meanwhile, the technical indicators on the daily chart, although they have been losing positive traction, are still in bullish territory. This makes it prudent to wait for a convincing breakout through channel support before placing aggressive bearish bets.
The mentioned support is currently pegged at the 1.3735 region. Some subsequent selling below 1.3700 will reaffirm the negative outlook and make the GBP / USD vulnerable to accelerate the slide towards the next relevant support near 1.3650.
On the other hand, the 1.3790-1.3800 area now appears to have emerged as strong immediate resistance. This is followed by resistance at the downward sloping trend line extending from late July, currently around the 1.3825 region before the 1.3845-50 confluence barrier.
The latter comprises the 200-day SMA and the upper end of the ascending channel, which if decisively cleared will be seen as a new trigger for bull traders. Momentum could help GBP / USD point towards a recovery from the round 1.3900 level.
Daily chart GBP / USD