Stays Bearish Below 1.3100, Low Looks Limited

• GBP / USD witnessed a modest pullback from resistance marked by 61.8% of the Fibonacci level.
• The prospects for some buying to emerge on the dips should help any significant downturn.

The pair GBP/USD It maintained its offered tone during the early North American session and was last seen trading near the lower end of its daily trading range, below 1.3100. The intraday decline, so far, has managed to find decent support near the 50% Fibonacci level of the recent 1.3482-1.2676 drop.

Given the overnight advance, a week-old downtrend line resistance, the bias remains tilted in favor of bullish traders. The constructive outlook is bolstered by the fact that the oscillators on the daily chart maintained their bullish bias and have also moved away from overbought territory on the 4-hour chart.

With that said, it will still be prudent to wait for some subsequent purchases beyond the overnight high, around the 1.3175 region, which coincides with the 61.8% Fibonacci level, before positioning for any further appreciation moves. The GBP / USD pair could then target to break above the 1.3200 level and test the 1.3235 resistance zone.

On the other hand, any further drop below 50% of the Fibonacci level could still be seen as an opportunity to initiate new bullish positions amid the latest optimism about the resumption of Brexit negotiations. This, in turn, should help limit the decline near the horizontal support at 1.3030-25, which is followed by the key psychological level at 1.3000.

The latter marks the mentioned trend line resistance break point and should now act as a solid foundation for the GBP / USD pair. Failure to defend the aforementioned support levels will negate any prospect of a further short-term appreciation move and instead generate an aggressive technical sell amid resurgent demand for the USD.

4 hour chart