GBP/USD Price Analysis: Consolidates around 38.2% Fibo. level, not out of the woods yet

• GBP/USD edges lower for the third straight day and drops to over a one-week low on Monday.
• A combination of factors continues to underpin the USD and exerts some downward pressure.
• The technical setup also favours bears and supports prospects for additional near-term losses.

The GBP/USD pair recovers a few pips from over a one-week low and trades in neutral territory, around the 1.1075 region during the early North American session.

An intraday recovery in the global risk sentiment - as depicted by a positive turnaround in the equity markets - caps gains for the safe-haven US dollar and acts as a tailwind for the GBP/USD pair. The British pound further draws support from the Bank of England's move to launch the Temporary Expanded Collateral Repo Facility (TECRF) to support market functioning.

That said, worries about a deeper global economic downturn, a further escalation in the Russia-Ukraine conflict and fresh US-China trade jitters should keep a lid on any optimistic move. This should lend support to the buck amid hawkish Fed expectations. This, along with concerns about the UK government's fiscal policy, might cap the upside for the GBP/USD pair.

From a technical perspective, spot prices, so far, have shown some resilience below the 38.2% Fibonacci retracement level of the recent recovery from an all-time low. That said, the post-NFP breakdown below the 1.1180 confluence - comprising of 100-period SMA on the 4-hour chart and the lower end of a two-week-old ascending trend channel - favours bearish traders.

This, in turn, suggests that the path of least resistance for the GBP/USD pair is to the downside and any attempted recovery might still be seen as a selling opportunity. Hence, a subsequent fall below the 1.1025 area (the daily swing low), towards the 1.1000 psychological mark, remains a distinct possibility ahead of the monthly UK employment details on Tuesday.

On the flip side, the 1.1100 mark now seems to act as an immediate barrier ahead of the 100-period SMA on the 4-hour chart, currently around the 1.1165 region. This is followed by the 1.1200 round figure, which if cleared decisively could trigger a short-covering rally. The GBP/USD pair could then accelerate the recovery move and aim back to reclaim the 1.1300 round-figure mark.

GBP/USD 4-hour chart

Key levels to watch