GBP/USD Forecast: retreating from a key resistance, could slide back below 1.3700 mark

Haresh Menghani FXStreet

The GBP/USD pair had a good two-way movement on Tuesday, initially was weighed down by a dip in the UK CPI but managed to find some support at lower levels on the back of some renewed US Dollar selling pressure. The pair built on overnight rebound and jumped to fresh post-Brexit highs during the Asian session on Wednesday.

The up-move, however, ran into a key resistance near the 1.3835 region, marking Feb. 2016 lows, and was capped by a solid US Dollar recovery. In absence of any major market moving economic releases from the UK, the USD price dynamics would continue to act as an exclusive driver of the pair's momentum on Wednesday.

Technically, the pair remains positioned in near-term overbought conditions and repeated failures to sustain above the 1.3800 handle has now increased possibilities for a near-term correction. A follow-through weakness below 1.3740 level would add credence to the expectations and accelerate the profit-taking slide towards the 1.3700 handle en-route 1.3655 intermediate level and the 1.3615-10 strong support.

On the upside, momentum beyond the 1.3800 handle might continue to confront fresh supply near the 1.3835 region, which if cleared should pave the way for an extension of the pair's bullish trajectory towards reclaiming the 1.3900 round figure mark.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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