GBP/USD forecast: Dips below 1.2300 handle might now be seen as a buying opportunity

After an initial uptick, back closer to multi-week tops set in the previous session, the GBP/USD pair edged lower and dropped to the 1.2300 neighbourhood during the early European session on Tuesday. The intraday pullback lacked any obvious catalyst and could be solely attributed some profit-taking amid a slight deterioration in the global risk sentiment, which tends to benefit the US Dollar's relative safe-haven status against its British counterpart.

Brexit optimism remains supportive

However, the recent optimism over a softer Brexit, coupled with the fact that the UK lawmakers voted against the PM Boris Johnson's bid for an early election continued underpinning the British Pound and helped limit the downside. The UK Parliament has been prorogued for five-weeks to October 14, though any fresh political developments might continue to play a key role in driving the broader market sentiment surrounding the Sterling.
 
Meanwhile, data released this Tuesday showed that the UK average weekly earnings excluding bonuses ticked lower on expected lines and came in at 3.8% 3m/Yr as compared to 3.9% previous. However, wages including bonus rose 4.0% 3m/Yr in July and the unemployment rate fell to 3.8% during the reported month, both surpassing consensus estimates. Adding to this, the number of people claiming jobless benefits also matched market expectations and climbed to 28.2K in August from the previous month's downwardly revised reading of 19.8K (28K reported earlier), albeit did little to impress the GBP bulls or provide any meaningful impetus to the major.
 
There isn't any major market-moving US economic data due for release on Tuesday and hence, the pair seems more likely to enter a bullish consolidation phase and attempt to build on its recent recovery move from multi-year lows - sub-1.20 level tested at the beginning of this month.

Short-term technical outlook

Looking at the technical picture, nothing seems to have changed much for the pair and the near-term bias remains tilted in favour of bullish traders. Hence, any subsequent slide below 50-day SMA immediate support - around the 1.2300-1.2290 region - might attract some dip-buying interest near a short-term descending trend-line resistance breakpoint near the 1.2230-20 zone ahead of the 1.2200 round figure mark. On the flip side, the 1.2380-85 region now seems to have emerged as an immediate resistance, above which the pair seems all set to surpass the 1.2400 handle and aim towards challenging its next major hurdle near the 1.2435-40 region.