- GBPUSD erodes a major part of its weekly gains amid resurgent USD demand.
- A sustained break below the 1.1400 mark will pave the way for further losses.
- Attempted recovery could be seen as a selling opportunity and remain capped.
The GBPUSD pair comes under heavy selling pressure on Wednesday and stalls a three-day-old bullish trend to over a one-week high touched the previous day. The intraday downfall picks up pace during the early North American session and drags spot prices to a fresh daily low, with bearish now awaiting a sustained weakness below the 1.1400 mark.
A fresh leg up in the US Treasury bond yields, along with a generally weaker tone around the equity markets, assists the US Dollar to stage a goodish recovery from a multi-week low. The British pound, on the other hand, is weighed down by the Bank of England’s gloomy outlook for the UK economy. The combination of the aforementioned factors attracts fresh sellers around the GBPUSD pair and supports prospects for additional losses.
The overnight failure near the 1.1600 round-figure mark adds credence to the negative outlook. That said, technical indicators on the daily chart are yet to confirm a bearish bias and warrant some caution. This makes it prudent to wait for some follow-through selling before confirming that the post-NFP recovery move from levels just below mid-1.1100s has run out of steam and positioning for a further depreciating move for the GBPUSD pair.
Spot prices might then accelerate the fall to the 1.1355-1.1350 intermediate support before eventually dropping to the 1.1300 round figure. The downward trajectory could further get extended and expose the 1.1200 mark, below which the GBPUSD pair could aim to retest last week’s swing low, around mid-1.1100s.
On the flip side, the 1.1445-1.1450 region now seems to act as an immediate strong resistance ahead of the 1.1500 psychological mark. Any further recovery might continue to attract fresh supply near the 1.1575-1.1580 region and remain capped. That said, some follow-through buying beyond the 1.1600 mark will negate the negative bias and lift the GBPUSD pair towards the October monthly swing high, around the 1.1645 region.
GBPUSD 4-hour chart
Key levels to watch