GBP/USD struggles at 1.3700 amid US dollar weakness across the board

• The GBP/USD pair stalls at the 50-DMA retrace below 1.3700.
• Risk-on market sentiment boosts the GBP undermines the greenback.
• GBP/USD: The Relative Strength Index above 50, aiming higher, indicates that there could be a leg-up near 1.3800.

The GBP/USD retreats from the daily high around 1.3733, advances 0.20% during the New York session, trading at 1.3688 at the time of writing. The British pound could not hold to the 1.3700 level, broke the latter in a counter-trend move, which in 4-hours witnessed a 60 pip drop.

Risk-on market sentiment drives the market, portrayed by US equity indexes, posting gains between 1.47% and 1.82%.  Risk-sensitive currencies, like the AUD and the GBP, are greatly favored. Additionally,  the British pound had a boost over the weekend when Bank of England’s members expressed their interest in tackling rising inflation by hiking interest rates.

The greenback has been under selling pressure across the board, with the US Dollar Index that measures the buck’s performance against a basket of six currencies, slides 0.11%, clings to 93.97. Nevertheless, despite those factors, the US dollar trimmed some of its losses against the Sterling.

GBP/USD Price Forecast: Technical outlook

Daily chart

Despite the broad US dollar weakness, the Sterling advance stalled at the 50-day moving average, around 1.3716. The subsequent price action exerted downward pressure on the pair. Momentum indicators like the Relative Strenght Index (RSI) at 52 indicate that the GBP/USD pair might print another leg-up before resuming the downward trend, but firstly the pair will need a daily close above the 50-DMA.

In that outcome, the following leg-up could reach the 1.3800 figure, which confluences with the 78.6% Fibo retracements (from the September 14 pivot high to the September 29 pivot low), before resuming to the downside.

On the flip side, failure at 1.3700, could see the pair sliding towards the 1.3600 figure, followed immediately by the lows of the last five days, around 1.3570.

KEY ADDITIONAL LEVELS TO WATCH