- GBP/USD saw moderate/range-limited price movements on the last trading day of the week.
- Oscillators on the daily/hourly charts support the outlook for a break below the trading range.
- A sustained move above 1.2600 is needed to negate the short-term bearish outlook.
GBP/USD struggled to gain meaningful traction and swung between tepid gains and minor losses during Friday’s first European session. The pair was last seen just below the psychological 1.2500 mark, virtually unchanged for the day.
The US Dollar continued to benefit from high US Treasury bond yields and proved to be a key factor that acted as a headwind for the GBP/USD pair. The pound was further undermined by political jitters in the UK, although signs of stability in equity markets capped the safe haven and helped limit the decline for the major.
From a broader perspective, GBP/USD has been hovering in a familiar range for the past two weeks or so. The 1.2470-1.2460 region has provided some support for spot prices and should now act as a pivot point. Meanwhile, technical indicators on the daily/hourly charts remain in negative territory and support the outlook for a possible breakdown.
However, it would be prudent to wait for sustained weakness below the trading range support before positioning for any significant declines. The next relevant support is anchored near the weekly low, around the 1.2430 region hit on Tuesday, below which GBP/USD could become vulnerable to accelerate the drop below 1.2400.
Some follow-up selling would expose the 1.2335-1.2330 support zone, which is closely followed by the 1.2300 mark. Failure to defend the latter would leave GBP/USD vulnerable to extending the bearish path towards 1.2245 intermediate support and slide further to retest levels below 1.2200 in the near term.
On the other hand, immediate resistance is anchored near the 1.2530 region. Any further upside may continue to face strong resistance and remain capped near the round number of 1.2600. That said, sustained strength beyond that could trigger a short-hedging move and pull GBP/USD back towards May’s monthly high around the 1.2660-1.2665 area.