GBP/USD Price Analysis: Hangs near weekly low, bears flirt with 1.1200 mark

• GBP/USD languishes near the weekly low through the Asian session on Thursday.
• The UK political uncertainty, bullish USD continue to act as a headwind for the pair.
• A sustained weakness below the 1.1200 mark is needed to confirm a bearish break.

The GBP/USD pair slides back closer to the lower end of its weekly range during the Asian session on Thursday, though shows some resilience below the 1.1200 round-figure mark. The modest intraday bounce, however, meets with some supply ahead of the mid-1.1200s amid the underlying bullish sentiment surrounding the US dollar.

Firming expectations that the Federal Reserve will stick to its aggressive rate-hiking cycle to tame inflation remains supportive of elevated US Treasury bond yields and act as a tailwind for the buck. Apart from this, a weaker risk tone offers additional support to the safe-haven greenback and should cap the upside for the GBP/USD pair amid the UK political uncertainty.

From a technical perspective, spot prices earlier this week faced rejection near a resistance marked by a downward sloping trend-line extending from late August. The subsequent downfall reaffirms the hurdle and favours bearish traders. That said, oscillators on the daily chart are yet to confirm a negative bias and warrant some caution before positioning for further decline.

That said, sustained weakness below the 1.1200 mark should pave the way for a sharp fall towards the next relevant support near the mid-1.1100s. The downward trajectory could further get extended and drag the GBP/USD pair towards the 1.1100 mark en route to the 1.1055-1.1050 support sone. Spot prices could eventually drop back to challenge the 1.1000 psychological mark.

On the flip side, the daily peak, around the 1.1240 area, now seems to act as an immediate resistance, which, if cleared, might trigger a short-covering bounce. Any subsequent move up, however, is likely to attract fresh sellers near the 1.1300 mark. This, in turn, should cap the upside near the 1.1335-1.1345 region. This is closely followed by the aforementioned trend-line resistance.

GBP/USD daily chart

Key levels to watch