GBPUSD has been flatlining within the 1.3600 – 1.3700 area so far this week, unable to find enough buying traction to recoup the pullback from the down-trending channel ahead of the Bank of England’s policy meeting at 12:00 GMT today.
On the positive side, the price seems to be rejecting any downfalls towards the bottom of the channel, increasing the case for another test of the upper boundary of 1.3780. Prior to that, the bulls will also need to overcome the shorter-term simple moving averages (SMAs) and the 38.2% Fibonacci of the 1.4248 – 1.3411 downleg at 1.3730. But the RSI and the MACD are currently providing little hope for a meaningful upside breakout as the former is extending its downtrend below its 50 neutral mark and the latter is diving in the negative zone.
If the bears claim the 1.3600 base, which coincides with the 23.6% Fibonacci, the pair may seek shelter near the 1.3450 restrictive region. A decisive close lower would open the door for the 2021 trough of 1.3411, while deeper in the channel, the pair may attempt to rebound near the support trendline at 1.3300.
In the bullish scenario, where the price accelerates above the ceiling formed between the 50% Fibonacci of 1.3829 and the 200-day SMA, immediate resistance could emerge near September’s swing high of 1.3914. Beyond that, the focus will shift to the 61.8% Fibonacci of 1.3982 and the 1.4000 round level.
Summarizing, the short-term risk for GBPUSD is viewed as neutral-to-bearish. For the bulls to take control, the price will need to show a sustainable recovery above the channel, and more importantly, above 1.3846.
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