- GBP/USD witnessed an intraday reversal from the one-week high reached on Thursday.
- A sustained break below 1.3000 would set the stage for additional short-term losses.
- Any recovery attempts are more likely to remain capped near the 1.3100 round level.
The pair GBP/USD moderated the bullish rally in the middle of the European session to a one-week low and fell to a new daily low, around the 1.3030-1.3025 region in the last hour.
The US dollar was supported by a new bull run in US Treasury yields, buoyed by expectations of the Fed’s hawkish line, and has now recovered a significant portion of its early losses to the weekly low. . This, in turn, was seen as a key factor behind the GBP/USD’s sharp intraday drop of more than 50 pips. From a technical perspective, the pair’s inability to capitalize on the positive move and the appearance of fresh selling at higher levels suggests that the short-term decline may still be far from over. Therefore, any further upside is likely to remain capped near the 1.3100 confluence hurdle.
Said handle comprises the 200-period SMA on the 4-hour chart and a descending trend line, which should act as a central point and help determine the short-term path. A convincing advance would suggest that the GBP/USD pair has formed a base below the psychological 1.3000 level. This, in turn, would pave the way for further gains and push the pair’s prices to the next relevant hurdle near the 1.3145-1.3150 area, above which the bulls could aim to recapture the 1.3200 round figure. The positive momentum could extend further into the 1.3260-1.3265 horizontal zone.
On the other hand, the 1.3000-1.2990 area could continue to protect the immediate drop. Sustained weakness below, leading to a subsequent break through the yearly low near the 1.2975-1.2970 zone, would make the GBP/USD pair vulnerable to resume its previous well-established downtrend. The downward path could then drag the pair into the 1.2910-1.2900 support zone en route to the 1.2850 support zone. The GBP/USD pair could eventually drop to test the intermediate support at 1.2820 before the round 1.2800 level.
GBP/USD 4-hour chart
Technical levels
Source: Fx Street
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