GBP/USD Price Analysis: Trades with modest gains above 1.2200 mark, 200 DMA holds the key

• GBP/USD attracts some buying near the 200-day SMA, though lacks follow-through.
• The overnight failure near the trend-channel resistance warrants caution for bulls.
• A sustained break below the 1.2100 mark should pave the way for deeper losses.

The GBP/USD pair finds some support near the very important 200-day SMA and stalls the previous day's retracement slide from its highest level since June 17. Spot prices, however, struggle to gain any meaningful traction and seesaw between tepid gains/minor losses around the 1.2200 mark through the mid-European session.

The US Dollar struggles to capitalize on the overnight solid recovery move from over a five-month low and turns out to be a key factor lending support to the GBP/USD pair. That said, expectations that the Fed may raise interest rates more than projected act as a tailwind for the buck. This, along with a bleak outlook for the UK economy, keeps a lid on any meaningful upside for spot prices.

From a technical perspective, the overnight failure near a resistance marked by the top end of over a two-month-old ascending channel could be seen as the first sign of bullish exhaustion. The lack of follow-through selling, however, warrants some caution before confirming that the GBP/USD pair might have formed a near-term top and positioning for any meaningful corrective downfall.

In the meantime, the daily swing low, around the 1.2160-1.2155 area, could act as immediate support ahead of the 200 DMA, currently around the 1.2135 region. This is followed by the 1.2100 mark, which if broken decisively will make the GBP/USD pair vulnerable to weaken further to the 1.2000 psychological mark. The downward trajectory could get extended to the 1.1935-1.1930 horizontal support.

On the flip side, any meaningful intraday positive move might confront hurdle near the 1.2250-1.2255 zone, above which the GBP/USD pair could reclaim the 1.2300 mark. Some follow-through buying should allow bulls to aim back to the multi-month peak, around the 1.2345 area touched on Monday. Spot prices could eventually climb to the trend-channel barrier, currently around the 1.2400 mark.

GBP/USD daily chart

Key levels to watch