GBP/USD Price Analysis: Recovers a few pips from daily low, lacks follow-through

The GBP/USD pair rebounds a few pips from the daily low and climbs back above the 1.1300 mark during the early North American session. The modest recovery is sponsored by the emergence of some US dollar selling, though lacks bullish conviction amid the UK political uncertainty.

In fact, rebels within the ruling Tory Party are coming together to replace the newly-elected UK Prime Minister Liz Truss in the wake of the recent tax cut fiasco. Apart from this, reports that the Bank of England is set to further delay quantitative tightening to help stabilize bond markets act as a headwind for sterling and cap the GBP/USD pair.

Moreover, oscillators on the daily chart have been struggling to gain any traction, suggesting that any subsequent move up might confront resistance near the 1.1400-1.1410 area. This is followed by the overnight swing high, around the 1.1440 area, above which the GBP/USD pair could climb to the monthly peak, just ahead of the 1.1500 psychological mark.

The latter coincides with the 50-day SMA, which if cleared decisively should pave the way for an extension of the recent recovery from an all-time low touched in September. The GBP.USD pair might then accelerate the momentum towards the 1.1555-1.1560 intermediate resistance before eventually climbing to the 1.1600 round-figure mark.

On the flip side, weakness below the 1.1300 mark now seems to find some support near the daily low, around the 1.1255 region. Some follow-through selling would expose the 1.1200 level, below which the GBP/USD pair could slide to the next relevant support near the mid-1.1100s. The latter should now act as a pivotal point for spot prices.

Failure to defend the mentioned support levels will negate any near-term positive bias and shift the bias back in favour of bearish traders. The GBP/USD pair could then accelerate the fall towards testing the 1.1100 mark and the 1.1055-1.1050 support zone.

GBP/USD daily chart

Key levels to watch