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GBP/USD Recovery Could Fade Near 1.2400

Aayush Jindal

Aayush Jindal

Key Highlights

  • GBP/USD started an upside correction from 1.1935.
  • A major bearish trend line is forming with resistance near 1.2340 on the 4-hours chart.
  • EUR/USD is still struggling below the 1.0600 resistance zone.
  • USD/JPY is eyeing more gains above the 135.50 level.

 

GBP/USD Technical Analysis

The British Pound declined heavily below 1.2500 against the US Dollar. GBP/USD even broke the 1.2000 level before it found support.

Looking at the 4-hours chart, the pair traded as low as 1.1933. It started an upside correction and traded above the 1.2100 resistance zone. There was a move above the 50% Fib retracement level of the downward move from the 1.2599 swing high to 1.1933 low.

However, the pair stayed below the 1.2450 resistance, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).

It also failed near the 61.8% Fib retracement level of the downward move from the 1.2599 swing high to 1.1933 low. Besides, there is a major bearish trend line forming with resistance near 1.2340 on the same chart.

On the upside, an immediate resistance is near the 1.2340 level and the trend line. The next major barrier could be near 1.2400. A clear move above the 1.2400 level might push the pair towards the 1.2600 level in the near term.

If not, it could start a fresh decline towards the 1.2150 support. The next major support is near the 1.2080 level. Any more losses might call for a test of the 1.2000 support.

Looking at EUR/USD, the pair is consolidating above the 1.1450 support zone and is facing a major resistance near the 1.0600 level.

Economic Releases

  • Canadian Retail Sales for April 2022 (MoM) – Forecast +0.8%, versus 0% previous.
  • Canadian Retail Sales ex Autos for April 2022 (MoM) – Forecast +0.6%, versus +2.4% previous.