- GBP/USD edged higher on Wednesday, albeit lacked any strong follow-through buying.
- Renewed USD buying interest was seen as a key factor capping any meaningful upside.
- The technical set-up favours bullish traders and supports prospects for additional gains.
The GBP/USD pair traded with a mild positive bias through the early North American session, albeit seemed struggling to build on the momentum beyond the 1.3700 mark.
The US dollar was back in demand amid a modest bounce in the US Treasury bond yields and held steady following the release of US consumer inflation figures. This, in turn, was seen as one of the key factors capping gains for the GBP/USD pair.
From a technical perspective, the overnight breakout momentum through a short-term descending trend-line resistance supports prospects for additional gains. The constructive set-up is reinforced by bullish oscillators on hourly/daily charts.
That said, bulls might still wait for some follow-through buying beyond the 1.3700 round-figure before positioning for any further appreciating move. The GBP/USD pair might then accelerate the momentum to the 1.3775-80 area en-route the 1.3800 mark.
On the flip side, the daily swing lows, around mid-1.3600s, now seems to act as immediate support. Any subsequent slide might attract some dip-buying and help limit the downside near the trend-line resistance breakpoint, around the 1.3600 level.
Failure to defend the mentioned resistance-turned-support might prompt some technical selling and drag the GBP/USD pair further towards the 1.3560-55 horizontal support. This is followed by strong support near the 1.3520-15 region.
A convincing breakthrough, leading to weakness below the key 1.3500 psychological mark will negate any near-term positive bias and constitute the formation of a bearish double-top. This would set the stage for some meaningful corrective slide.
GBP/USD 4-hourly chart
Technical levels to watch
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