GBP/USD Price Analysis: On the back foot near 1.3900 mark ahead of NFP
|- GBP/USD witnessed some selling on Friday and eroded a part of the post-BoE gains.
- The formation of a descending triangle and double-top pattern favours bearish traders.
- Investors seemed reluctant ahead of the US jobs report, warranting caution for bears.
The GBP/USD pair edged lower on the last day of the week and was last seen hovering near the lower end of its daily trading range, just above the 1.3900 mark.
From a technical perspective, the overnight post-BoE rebound from the 1.3870 support zone stalled near a one-week-old descending trend-line resistance, forming a descending triangle on hourly charts. Adding to this, the recent failures ahead of the key 1.4000 psychological mark constituted the formation of a double-top on the daily chart.
The combination of bearish patterns suggests that the recent strong rebound from the lowest level since early February has run out of steam. This, in turn, supports prospects for some meaningful corrective slide amid the prevalent US dollar buying interest, supported by Fed Vice Chair Richard Clarida's hawkish comments earlier this week.
Investors, however, seemed reluctant to place any aggressive bets, rather prefer to wait for the release of the closely-watched US monthly jobs report. Hence, it will be prudent to wait for a sustained break below the 1.3870 horizontal support before confirming a bearish breakdown and positioning for any further near-term depreciating move.
The GBP/USD pair might then accelerate the fall to challenge the 100-day SMA support, currently near the 1.3745 region. Some follow-through selling should pave the way for a slide to the 1.3700 mark, which if broken decisively will reaffirm the bearish outlook. The next relevant support is pegged near the 1.3630 region ahead of the 1.3600 mark.
On the flip side, the mentioned descending trend-line, around the 1.3935-40 region, should continue to cap the immediate upside. A sustained strength beyond, leading to some follow-through move above July swing highs, around the 1.3980-85 region, will negate the near-term bearish bias and prompt some aggressive short-covering move.
The GBP/USD pair might then aim to surpass the 1.4050-55 intermediate resistance and climb further towards reclaiming the 1.4100 mark for the first time since June 16.
GBP/USD 4-hour chart
Technical levels to watch
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