GBP/USD Price Analysis: Bounces off multi-week low, shows some resilience below 50% Fibo.

• GBP/USD dropped to a fresh multi-week low, though found support ahead of the monthly low.
• The set-up still favours bearish traders and supports prospects for a further depreciating move.
• Attempted recovery could be seen as a selling opportunity near the 1.3530 support breakpoint.

The GBP/USD pair extended its recent pullback from the vicinity of mid-1.3700s, or a two-month low and witnessed some selling for the fourth successive day on Tuesday.

The downward trajectory dragged spot prices to a fresh three-week low during the mid-European session, though stalled just ahead of the monthly swing low. The GBP/USD pair once again showed some resilience below the 50% Fibonacci retracement level of 1.3161-1.3749 move up and has now recovered to the 1.3465 area.

Given the overnight breakthrough the 100-day SMA and the 38.2% Fibo. confluence and the subsequent slide below the 1.3500 psychological mark, the bias remains tilted in favour of bearish traders. Hence, any attempted recovery runs the risk of fizzling out rather quickly and remain capped amid the UK political crisis.

The near-term negative outlook is reinforced by the fact that technical indicators on the daily chart have just started drifting into the negative territory. A subsequent slide below the monthly swing low, around the 1.3430 region, will reaffirm the bearish bias and set the stage for a further near-term depreciating move.

The GBP/USD pair might then turn vulnerable to accelerate the downfall towards the 1.3400 mark en-route the 61.8% Fibo. level support, around the 1.3380 region. Some follow-through selling has the potential to drag spot prices further towards the next relevant support near the 1.3320 horizontal zone.

On the flip side, the 1.3500 mark now seems to act as an immediate resistance ahead of the 1.3530-1.3535 confluence support breakpoint. A sustained strength beyond could trigger a short-covering bounce and allow bulls to aim back to reclaim the 1.3600 mark, which coincides with the 23.6% Fibo. level resistance.

GBP/USD daily chart

Technical levels to watch