The intraday decline in the GBP/USD is reversed as intense selling of the USD begins to take place. Spot prices continue to trade below a crucial 200-day SMA and lack bullish confidence. The mentioned obstacle is a turning point since it lines up with increasing channel resistance.
On Monday, the GBP/USD pair drew some buying in the 1.2025 area but could not take advantage of the little intraday increase. Throughout the early North American session, the pair oscillates between modest gains and losses, and it currently seems to have reached equilibrium around the 1.2060 level.
As expectations for a very modest Fed rate increase in December rise, the US Dollar faces intense selling pressure and is a major factor supporting the GBP/USD pair. Nevertheless, the risk-off mindset lessens the potential downside for the safe-haven dollar. In addition, the UK economy’s dismal prognosis makes any significant improvements for the vast company unlikely.
Technically, spot prices have been rising upward over the previous two months or so along an ascending channel. The 200-day SMA, a crucial indicator, and the upper limit of the channel above both lie in the region between 1.2170 and 1.2175 at the moment. This will now serve as a critical milestone, and if it is convincingly cleared, bullish traders will see it as a new trigger.
The daily chart’s oscillators favor optimistic traders by keeping in the positive region and being outside of the overbought area. Despite this, it will still be wise to hold off on making any further appreciating move into the 1.2270–1.2275 resistance zone until there has been a vital breakthrough past the confluence mentioned above the obstacle.
On the other hand, the daily swing low, which is at 1.2025, may safeguard the near fall before the crucial 1.2000 level. Any further slide is more likely to draw new buyers and be contained close to the horizontal support of 1.1965. If the support mentioned above is not held, the GBP/USD pair will be exposed to additional declines below the 1.1900 level.
On the way to the 1.1800 level, the corrective slide may push spot prices toward the next necessary support at the 1.1845-1.1840 area. The 1.1730 intermediate support, the 1.1700 round number, and the 100-day SMA, now in the 1.1650-1.1640 range, will all be exposed by some follow-through selling.
Daily GBP/USD chart