- GBP/USD edged higher on the last day of the week, though the uptick lacked bullish conviction.
- The recent range-bound price action points to indecision over the next leg of a directional move.
- Bulls need to conquer the 1.2500 mark before positioning for an extension of the recent recovery.
The GBP/USD pair attracted some dip-buying on Friday, albeit struggled to capitalize on the move and remained below the 1.2500 psychological mark through the early North American session.
Better-than-expected UK macro data turned out to be a key factor that provided modest lift to the British pound, though stagflation fears and Brexit woes acted as a headwind. Apart from this, a goodish pickup in the US dollar demand kept a lid on any meaningful upside for the GBP/USD pair.
Looking at the broader picture, spot prices have been oscillating in a broader trading range held over the past four trading sessions. This points to indecision over the next leg of a directional move for the GBP/USD pair and warrants caution amid mixed technical indicators on hourly/daily charts.
Oscillators on hourly charts are holding in the positive territory but are yet to confirm a bullish bias on the daily chart. Moreover, the GBP/USD pair, so far, has struggled to find acceptance above the 1.2500 mark, which coincides with the 38.2% Fibonacci retracement level of the 1.3090-1.2156 fall.
This makes it prudent to wait for strong follow-through buying beyond the aforementioned barrier before placing aggressive bullish bets. The GBP/USD pair might then climb to the 1.2570-1.2575 region en-route the 1.2600 round figure and the 50% Fibo. level, around the 1.2630-1.2635 zone.
On the flip side, the daily swing low, around the 1.2440-1.2435 area, should now protect the immediate downside ahead of the 1.2400 mark. This is followed by support near the 1.2380-1.2375 region, or the 23.6% Fibo. level, which if broken will shift the bias back in favour of bearish traders.
The next relevant support is pegged near the lower boundary of a multi-day-old trading range, around the 1.2330 region. A convincing break through the latter would make the GBP/USD pair vulnerable to weakening further below the 1.2300 handle, towards testing the 1.2270-1.2260 support zone.
GBP/USD 4-hour chart
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Key levels to watch
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