GBP/USD Price Analysis: Plummets to over one-week low, eyes 1.2500 mark

• GBP/USD meets with aggressive supply on Thursday and retreats further from a one-year peak.
• Resurgent USD demand exerts heavy pressure as traders seem rather unimpressed by the BoE.
• The mixed technical setup suggests that spot prices could defend the ascending channel support.

The GBP/USD pair comes under intense selling pressure on Thursday and extends the overnight rejection slide from the 1.2680 region, a resistance marked by the top end of over a one-month-old ascending trend channel. The intraday downfall picks up pace after the Bank of England (BoE) announced its monetary policy decision and drags spot prices to over a one-week low, around the 1.2540 region during the early North American session.

The British Pound weakens across the board in the absence of any major surprises from the UK central bank, which, along with resurgent US Dollar (USD) demand, weigh heavily on the GBP/USD pair. The risk-off impulse - as depicted by a fresh leg down in the equity markets - turns out to be a key factor that benefits the safe-haven Greenback. The USD bulls, meanwhile, seem rather unaffected by the disappointing US macro data and a sharp intraday slide in the US Treasury bond yields. This, in turn, supports prospects for a further intraday downfall for the major.

From a technical perspective, a convincing break through the 100-hour Simple Moving Average (SMA), around the 1.2580-1.2575 area, which coincides with the weekly low touched on Tuesday, is seen as a key trigger for bearish traders. Moreover, oscillators on the 4-hour chart have been gaining negative traction and could drag the GBP/USD pair below the 1.2500 psychological mark. That said, technical indicators on the daily chart are still holding in the positive territory, which should allow spot prices to defend the ascending channel support, currently around the 1.2475 area.

On the flip side, any meaningful recovery attempt now seems to confront stiff resistance near the 1.2575-1.2580 area, or the 100-hour SMA. This is closely followed by the 1.2600 round-figure mark, which if cleared will suggest that the corrective slide has run its course and set the stage for the resumption of the recent upward trajectory witnessed over the past month or so. The GBP/USD pair might then surpass an intermediate hurdle near the 1.2630 region and aim to retest the YTD peak, around the 1.2680 area and challenge the trend-channel resistance, currently around the 1.2700 mark.

GBP/USD 1-hour chart

Key levels to watch