Technical analysis – GBP/USD: Sellers retain control below key SMAs

GBP/USD remains capped below its 50- and 200-day simple moving averages (SMAs) near 1.3420 as investors digest discouraging political and macroeconomic developments. Earlier today, the UK unemployment rate climbed back to 5.0%, while employment in April recorded a loss of 100k jobs.

From a technical perspective, short-term risks remain tilted to the downside, as the RSI continues to fluctuate below its neutral 50 level and the MACD is entering negative territory.

If the wall at 1.3420 holds firm, the pair may once again seek support near 1.3300. An additional safety zone could emerge around 1.3200-1.3235 before the broader outlook turns bearish, potentially triggering a sharp decline toward 1.3090.

Alternatively, if Monday’s bullish engulfing pattern is confirmed with a move above 1.3420, the price could advance toward the 20-day SMA and the 1.3520 region. Should the 1.3600 barrier give way too, the pair may post a fresh higher high in the short-term picture near 1.3700, reviving its spring recovery trend.

Overall, GBP/USD remains vulnerable as long as it trades below its 50- and 200-day SMAs near 1.3420. However, for a broader deterioration in outlook, the bears would need to decisively cross below the 1.3200-1.3225 support base.