GBP/USD Price Analysis: Struggles to hold above 1.3800, bearish bias remains
- A combination of factors failed to assist GBP/USD to capitalize on its intraday uptick.
- The overnight break below a short-term ascending channel favours bearish traders.
- The pair seems vulnerable to slide further towards the 1.3735 area en-route 1.3700.
The GBP/USD pair attracted some dip-buying near the 1.3775-70 region and edged higher on the last day of the week, albeit lacked any follow-through.
The risk-on mood prompted some profit-taking around the safe-haven US dollar and extended some support to the GBP/USD pair. However, disappointing UK Retail Sales data acted as a headwind for the British pound. Apart from this, expectations for an imminent Fed taper announcement helped limit any deeper USD pullback and further collaborated to cap gains for the major.
From a technical perspective, the GBP/USD pair, so far, has struggled to build on the momentum, or find acceptance above the 1.3800 mark. This should now act as a key pivotal point for intraday traders. Given the overnight break below a short-term ascending trend-channel, the set-up seems tilted in favour of bearish traders and supports prospects for further losses.
The outlook is reinforced by the fact that technical indicators on hourly charts have been gaining negative momentum and just started drifting into the negative territory on the daily chart. Hence, a subsequent fall towards testing intermediate support, near the 1.3735 region, remains a distinct possibility. The downfall could further get extended towards the 1.3700 mark.
On the flip side, some follow-through buying beyond the daily swing highs, around the 1.3810 region, might trigger a short-covering move. The GBP/USD might then accelerate the move back towards the overnight swing highs, around the 1.3850-55 region. The momentum could eventually get extended towards the next relevant hurdle near the 1.3885-90 supply zone.
GBP/USD 4-hour chart
Technical levels to watch