GBP/USD: Recovery Continues to Struggle at 1.20 Barrier

Technical analysis of Forex market

Cable continues to face strong headwinds at psychological 1.20 barrier for the third consecutive day and eases below 1.20 level after hitting a session high at 1.2037.

Bulls already failed twice to sustain gains above 1.20 and on track for the third close below this level on Wednesday that would add to warning signals of recovery stall.

Higher than expected UK inflation in June add to bets for BOE rate high by 0.5% in August, though thee central bank doesn’t want to harm economic growth by aggressive increase of borrowing cost.

Political turmoil in Britain after PM Boris Johnson resigned also weigh on pound, with focus on today’ vote by Conservative party lawmakers, which will narrow the number of candidates for the new PM from three to two.

Technical studies on daily chart show rise in negative momentum and stochastic is peaking near overbought zone borderline that keeps bearish stance, with repeated close below 1.20 to increase risk or reversal.

Broken 10DMA marks pivotal support at 1.1934, with break here to further weaken near-term structure and risk further weakness.

Only sustained break of 1.20 and 20DMA (1.2034), would sideline downside risk and open way for stronger recovery.

Res: 1.2034; 1.2045; 1.2083; 1.2100
Sup: 1.1955; 1.1934; 1.1861; 1.1804

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