GBP/USD Price Analysis: Bulls trying to defend ascending channel support near mid-1.3700s

• GBP/USD stalled the previous day’s retracement slide near ascending channel support.
• A sustained breakthrough is needed to support prospects for a further near-term decline.

The GBP/USD pair witnessed an intraday turnaround from a short-term descending trend-line extending from late July and retreated over 70 pips from the 1.3825-30 resistance zone on Tuesday. The pullback, however, lacked strong follow-through selling and the pair, so far, has managed to defend support marked by the lower boundary of an upward sloping channel.

The dominant risk-on mood failed to assist the safe-haven US dollar to capitalize on the previous day's upbeat US data-inspired gains, instead led to a subdued/range-bound price action on Wednesday. This, in turn, extended some support to the GBP/USD pair amid rising bets for an imminent Bank of England rate hike move later this year.

That said, tensions between the UK and France over fishing rights, along with a fresh row over the Northern Ireland protocol acted as a headwind for the British pound. Investors also seemed reluctant to place any aggressive bets around the GBP/USD pair ahead of the annual budget announcement by the UK Finance Minister Rishi Sunak.

Meanwhile, technical indicators on the daily chart – though have been losing positive traction – are still holding in the bullish territory. This further makes it prudent to wait for a sustained break below the trend-channel support before confirming that the recent positive move has run out of steam and placing fresh bearish bets.

The GBP/USD pair might then accelerate the corrective slide to the 1.3725 intermediate support en-route the 1.3700 mark and the next relevant support near mid-1.3600s. Some follow-through selling will set the stage for fall towards testing sub-1.3600 levels ahead of the BoE and FOMC monetary policy meetings next week.

On the flip side, the 1.3790-1.3800 region now seems to act as immediate resistance for the GBP/USD pair ahead of the descending trend-line, around the 1.3825-30 supply zone. This is closely followed by the very important 200-day SMA, around mid-1.3800s, which if cleared will be seen as a fresh trigger for bullish traders.

GBP/USD daily chart

Technical levels to watch