GBP/USD Price Analysis: Retreats to mid-1.3700s, back closer to ascending channel support

• GBP/USD surrendered a major part of its intraday gains to the 1.3800 neighbourhood.
• Elevated US bond yields underpinned the USD and exerted some pressure on the pair.
• A break below ascending channel support is needed to confirm a fresh bearish break.

The GBP/USD pair struggled to preserve its intraday gains to the 1.3800 neighbourhood and has now retreated to the lower end of its daily trading range. The pair was last seen hovering around mid-1.3700s, just a few pips above lows touched during the Asian session.

The US dollar attracted some buying amid elevated US Treasury bond yields, bolstered by expectations for an early policy tightening by the Fed. This, in turn, was seen as a key factor that prompted fresh selling around the GBP/USD pair and led to the intraday decline.

The downfall dragged the GBP/USD pair back towards key pivotal support marked by the lower boundary of a one-month-old descending channel. A convincing break below will set the stage for an extension of the recent rejection slide from the very important 200-day SMA.

Meanwhile, technical indicators on the daily chart – though have been losing positive traction – are still holding in the bullish territory. This makes it prudent to wait for a convincing break through the channel support before placing aggressive bearish bets.

The mentioned support is currently pegged near the 1.3735 region. Some follow-through selling below the 1.3700 mark will reaffirm the negative outlook and turn the GBP/USD pair vulnerable to accelerate the fall towards the next relevant support near mid-1.3600s.

On the flip side, the 1.3790-1.3800 area now seems to have emerged as immediate strong resistance. This is followed by a downward sloping trend-line resistance extending from late July, currently around the 1.3825 region ahead of the 1.3845-50 confluence barrier.

The latter comprises of 200-day SMA and the top end of the ascending channel, which if cleared decisively will be seen as a fresh trigger for bullish traders. The momentum could then assist the GBP/USD pair to aim back to reclaim the 1.3900 round-figure mark.

GBP/USD daily chart

Technical levels to watch