GBP/USD Price Analysis: Bulls have the upper hand, 1.3500-1.3490 support holds the key

• GBP/USD gained some positive traction on Tuesday, though the uptick lacked bullish conviction.
• The technical set-up seems tilted in favour of bulls and supports prospects for additional gains.
• A convincing break below the 1.3500-1.3490 area is needed to negate the near-term positive bias.

The GBP/USD pair retreated a few pips from the daily high and was last seen trading with modest intraday gains, just below mid-1.3600s heading into the North American session.

The British pound drew some support from mostly in-line UK monthly employment report released earlier this Tuesday. On the other hand, a positive turnaround in the global risk sentiment undermined the safe-haven US dollar and extended some support to the GBP/USD pair.

That said, expectations for a faster policy tightening by the Fed and rallying US Treasury bond yields helped limit any deeper USD losses. Apart from this, tensions over the Northern Ireland Protocol of the Brexit agreement capped any further gains for the GBP/USD pair.

Looking at the broader picture, the pair has been oscillating in a familiar trading range over the past two weeks or so. This points to indecision among traders over the near-term trajectory for the GBP/USD pair and warrants some caution before placing directional bets.

Technical indicators, however, are holding with a mild positive bias. Moreover, the GBP/USD pair has repeatedly shown some resilience below the key 1.3500 psychological mark. The set-up seems tilted in favour of bullish traders and supports prospects for additional gains.

Any subsequent move beyond the 1.3600 mark, however, could confront stiff resistance near a downward sloping trend-line extending from July 2021. The said hurdle, currently around the 1.3625 region, coincides with last week's swing high and should act as a pivotal point.

On the flip side, acceptance below the 1.3500-1.3490 area will be seen as a fresh trigger for bearish traders and make the GBP/USD pair vulnerable. The downward momentum could then drag spot prices towards the next relevant support near the 1.3435 region en-route the 1.3400 mark.

GBP/USD daily chart

Key technical levels