- A subdued USD demand assisted GBP/USD to gain some positive traction on Thursday.
- The lack of follow-through buying suggests that the recent decline is still far from over.
- The pair still seems vulnerable to break below the 1.3400 mark and test mid-1.3300s.
The GBP/USD pair edged higher on Thursday, albeit struggled to capitalize on the attempted recovery move beyond mid-1.3400s. The pair was last seen trading with modest intraday gains and remained well within the striking distance of YTD lows touched in the previous day.
The US dollar consolidated its recent strong gains to the highest level since September 2020. This, along with an upward revision of the UK GDP growth figures for the second quarter, extended some support to the British pound and provided a modest lift to the GBP/USD pair.
However, expectations for an early policy tightening by the Fed continued acting as a tailwind for the greenback. Apart from this, the ongoing fuel crisis in the United Kingdom further collaborated to keep a lid on any meaningful upside for the GBP/USD pair, at least for now.
From a technical perspective, this week's sustained break below the 1.3600 strong horizontal support was seen as a key trigger for bearish traders. That said, slightly oversold conditions on short-term charts held traders from placing fresh bearish bets around the GBP/USD pair.
Nevertheless, the bias remains tilted firmly in favour of bearish traders and supports prospects for an extension of the recent depreciating move. From current levels, the GBP/USD pair seems vulnerable to break below the 1.3400 mark and test the next relevant support near mid-1.3300s.
On the flip side, any meaningful recovery is likely to confront stiff resistance near the key 1.3500 psychological mark. A sustained move beyond might trigger a short-covering move, though any subsequent move up is more likely to remain capped near the 1.3600 support breakpoint.
GBP/USD daily chart
