GBP/USD outlook: Bears are pausing but need sustained break above 1.20 to generate a reversal signal
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GBP/USD
Cable bounces on Thursday and probes levels above 1.20, after regaining traction on UK political news.
The top news of the day was a resignation of British Prime Minister Boris Johnson, who decided to step down after most of the ministers from his cabinet already resigned.
Pound’s recent drop was fueled by strong demand for safe-haven dollar, on growing fears that major economies are sliding into recession.
Cable hit the lowest in over two years on Wednesday (1.1875), with profit-taking and political news offering fresh support to British pound.
Reversal pattern is forming on daily chart, with north-heading 14-d momentum and RSI turning up from oversold zone border line, supporting the action, which sees daily close above 1.20 handle as minimum requirement for generating initial reversal signal, while extension above 1.2105 (falling 10DMA / 50% retracement of 1.2325/1..1875 bear-leg) would confirm signal and put bears on hold.
On the other side, larger structure is firmly bearish and fundamentals remain generally negative, with failure to clearly break 1.20 barrier (weekly close above this level) to signal that current action would be likely short-lasting consolidation before bears resume.
Confirmation of such scenario would require a clear break of longer-term key supports at 1.1958/30 (Sep 2021 / Oct 2016) to open way towards critical support at 1.1409 (2020 low).
Res: 1.2000; 1.2037; 1.2104; 1.2158.
Sup: 1.1908; 1.1875; 1.1822; 1.1751.
Interested in GBP/USD technicals? Check out the key levels
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