GBP/USD Price Analysis: The key contention level is seen at 1.2600–1.2610 zone

• GBP/USD oscillates in a trading band between 1.2600 and 1.2645 on Monday. 
• The major pair keeps the bearish outlook below the key EMA; RSI indicator shows non-directional action. 
• The first upside barrier will emerge at 1.2645; the initial support level is located at the 1.2600–1.2610 zone. 

The GBP/USD pair consolidates within a narrow trading range of 1.2600–1.2645 during the early European trading hours on Monday. The Bank of England (BoE) governor, Sarah Breeden said last week that the central bank has shifted from tightening rates to thinking about when they might come down as the recent falls in UK inflation have changed the BoE’s outlook. Traders prefer to wait on the sidelines ahead of the UK labor market data on Tuesday. At press time, GBP/USD is trading at 1.2630, gaining 0.01% on the day. 

Technically, GBP/USD maintains the bearish outlook unchanged as the pair is below the 100-period Exponential Moving Average (EMA) on the four-hour chart. It’s worth noting that the Relative Strength Index (RSI) hovers around the 50 midlines, indicating the non-directional action of the pair. 

A decisive break above the upper boundary of the Bollinger Band at 1.2645 will see a rally to the 100-period EMA at 1.2655. The additional upside filter to watch is a high of January 30 at 1.2721, en route to a high of January 31 at 1.2750. 

On the flip side, the initial support level is located in the 1.2600–1.2610 region, portraying the lower limit of the Bollinger Band, psychological round mark, and a low of February 9. A breach of this level will see a drop to a low of February 8 at 1.2572 and a low of December 11 at 1.2535.

GBP/USD four-hour chart