GBP/USD Price Analysis: 200-hour SMA caps the upside ahead of BoE’s Bailey, Fed’s Powell

• GBP/USD ticks lower during the Asian session on Wednesday, albeit lacks follow-through.
• The prevalent USD selling bias lends some support ahead of key central bank speakers.
• Bulls need to wait for a sustained move beyond 200-hour SMA before placing fresh bets.

The GBP/USD pair struggles to make it through the 200-hour Simple Moving Average (SMA) and edges lower during the Asian session on Wednesday. Spot prices erode a part of the previous day's strong gains to a fresh weekly high and currently trade just below mid-1.2700s, down less than 0.10% for the day.

Fears that the British economy is heading for recession, especially after a surprise 50 bps rate hike by the Bank of England (BoE), hold back traders from placing aggressive bullish bets around the Sterling Pound. This, in turn, is acting as a headwind for the GBP/USD pair, though a modest US Dollar (USD) weakness should help limit the downside, at least for the time being. Traders might also prefer to wait on the sidelines ahead of BoE Governor Andrew Bailey and Fed Chair Jerome Powell's appearance in a panel discussion at the ECB Forum on Central Banking in Sintra later this Wednesday.

From a technical perspective, the recent repeated failures to find bearish acceptance below the 1.2700 mark and the subsequent move up suggests that the corrective pullback from a 14-month low might have run its course. That said, bulls might still need to wait for a sustained strength beyond 200-hour SMA hurdle, currently pegged around the 1.2755-1.2760 region, before placing fresh bets. With oscillators on hourly/daily charts holding in the positive territory, the GBP/USD pair might then reclaim the 1.2800 mark and aim to challenge the YTD peak, around mid-1.2800s touched on June 16.

On the flip side, a convincing break and acceptance below the 1.2700 round figure will be seen as a fresh trigger for bearish traders. The GBP/USD pair might then accelerate the fall towards the next relevant support near the 1.2635 horizontal zone en route to the 1.2600 mark. Some follow-through selling will make spot prices vulnerable to accelerate the downfall further towards the 1.2500 psychological mark, with some intermediate support near the 1.2530-1.2525 region.

GBP/USD 1-hour chart

Key levels to watch