GBP/USD makes a little intraday rebound, but no more purchasing is seen. Support comes from a muted USD demand, although the upside is limited by UK political unpredictability. To support the possibility of further gains, a move past the 1.1400 handle is required.

During the early North American session, the GBP/USD pair recovers a few pip from the daily low and moves back over the 1.1300 level. The advent of some US dollar selling is supporting the minor rebound, but in light of the unpredictability surrounding UK politics, it lacks bullish confidence.

In fact, in the aftermath of the recent tax reduction catastrophe, rebels within the governing Tory Party are banding together to unseat newly-elected UK Prime Minister Liz Truss. In addition, news that the Bank of England may postpone quantitative tightening even longer in order to calm the bond market acts as a drag on sterling and caps the GBP/USD pair.

Additionally, oscillators on the daily chart have been unable to acquire much momentum, indicating that any further move higher may run into resistance close to the 1.1400-1.1410 region. The overnight swing high, located at the price of 1.1440, comes next. If this price is broken, the GBP/USD pair may rise to its monthly peak, which is just in front of the psychological level of 1.1500.

The latter is located at the same time as the 50-day SMA, and if forcefully cleared, should open the door for an extension of the current rebound from the record low reached in September. The GBP.USD pair may then gain pace as it approaches the 1.1555–1.1560 intermediate resistance before advancing to the 1.1600 round-figure level.

On the other hand, weakening below 1.1300 currently seems to find some support close to the daily low, in the area of 1.1255. The 1.1200 level would be exposed by some follow-through selling, below which the GBP/USD pair might decline to the next important support area in the vicinity of the mid-1.1100s. The latter is now expected to serve as a turning point for spot pricing.

Any short-term bullish bias will be nullified and the bias will shift back in favour of negative traders if the indicated support levels are not maintained. The GBP/USD pair may potentially continue to decline faster approaching the 1.1100 level and the 1.1055–1.1050 support range.

Daily GBP/USD chart