GBP/USD Price Analysis: Descending trend-line, around mid-1.3600s continues to cap gains

The GBP/USD pair attracted fresh buying on the first day of a new week and climbed to the 1.3640 area, back closer to the monthly high tested last week.

The optimism led by the news that US President Joe Biden and his Russian counterpart Vladimir Putin have agreed in principle to hold a summit on the Ukraine crisis undermined the safe-haven US dollar. Apart from this, rising bets for an additional interest rate hike by the Bank of England acted as a tailwind for the British pound and provided an additional lift to the GBP/USD pair.

The initial market reaction, however, turned out to be short-lived and faded rather quickly after a Kremlin spokesperson said that there were no concrete plans yet for a Putin-Biden meeting. Adding to this, UK Foreign Minister Liz Truss said that a Russian invasion of Ukraine looks highly likely drove some haven flows towards the buck and capped gains for the GBP/USD pair.

From a technical perspective, the pair, so far, has been struggling to break through a downward sloping trend-line resistance extending from July 2021. This is closely followed by the very important 200-day SMA, around the 1.3685 region and the 1.3700 mark. Sustained strength beyond will set the stage for a further appreciating move amid bullish technical indicators on the daily chart.

The GBP/USD pair might then aim to retest the YTD high, around mid-1.3700s before extending the momentum further towards reclaiming the 1.3800 mark for the first time since October 2021.

On the flip side, any meaningful decline might continue to attract some dip-buying near the 1.3600 mark and remain limited near the 1.3575-1.3570 region. Some follow-through selling, leading to subsequent weakness below near mid-1.3500s could make the GBP/USD pair vulnerable. The downward trajectory could then get extended towards challenging the key 1.3500 psychological mark.

GBP/USD daily chart

Technical levels to watch