GBP/USD bounces off new YTD low, hovers around 1.3230s

• The British pound moderately edges down, some 0.08% amid a risk-on market sentiment.
• In the overnight session, the GBP/USD pair fell to a new year-to-date low at 1.3160 amid imposing COVID-19 restrictions in the UK.
• GBP/USD Price Forecast: Has a downward bias, but a break of 1.3256 might add upward pressure on the pair.

The British pound recovers from year-to-date lows around 1.3160, trading at 1.3233 during the New York session at the time of writing. At press time, the market sentiment is upbeat, as positive news from the overnight session concerning the vaccine effectiveness against the newly discovered omicron strain shows that a third shot neutralizes the omicron variant, per reported by lab studies made by two COVID-19 vaccines makers.

In the overnight session, the GBP/USD dipped as low as 1.3160, as reports about the imposition of fresh COVID-19 measures in the UK could be effective as soon as tomorrow. That, alongside no advancement in Brexit negotiations, has put a lid on the pair amid a scale back by money market futures, which now expect that the Bank of England (BoE) would maintain rates unchanged, amid dovish expressions by “hawkish” BoE Saunders, on December 3. Saunders said there “could be particular advantages in waiting and seeing more evidence” of the COVID-19 omicron impact. 

An absent economic docket from the UK and the US would leave GBP/USD traders leaning in market sentiment and the US Consumer Price Index for November to be featured on Friday of this week.

GBP/USD Price Forecast: Technical outlook

The 1-hour chart depicts that the GBP/USD keeps headed south, as the hourly simple moving averages (SMA’s) remain above the spot price. The dip to a new year-to-date low coincided with a fall in the Relative Strength Index (RSI) down to 26, within oversold conditions, which propelled a bounce that pierced December 7 low at 1.3209, though stalled 15-pips below the central daily pivot point, which lies at 1.3246. 

However, GBP bulls would need to reclaim at least the 100-hour SMA at 1.3256, which, once achieved, would expose crucial resistance areas to the upside. The first resistance would be the confluence of the 200-hour SMA and the R1 daily pivot around 1.3284, followed by the figure at 1.3300

On the flip side, the first line of defense for pound bulls would be the December 7 cycle low at 1.3209.  A breach of the latter could send the pair tumbling towards the confluence of the S2 daily pivot and the new YTD low at 1.3160, followed by the S3 daily pivot at 1.3124.