GBP/USD Price Analysis: Ascending channel support, around 1.2135 holds the key for bulls

• GBP/USD gains some positive traction on Wednesday, though lacks follow-through.
• The risk-on impulse is undermining the safe-haven USD and offering some support.
• Rising US bond yields help limit the USD losses and keep a lid on any further gains.
• Investors also seem reluctant ahead of the BoE on Thursday and the NFP on Friday.

The GBP/USD pair defends support marked by the lower end of a nearly three-week-old ascending channel and attract some buying near the 1.2135 region on Wednesday.

The risk-on impulse - as depicted by a generally positive tone around the equity markets - undermines the safe-haven US dollar and offers some support to the GBP/USD pair. That said, a further rise in the US Treasury bond yields, bolstered by hawkish comments by several Fed officials on Tuesday, helps limit losses for the greenback.

The GBP/USD pair, meanwhile, struggles to find acceptance above the 1.2200 round figure and remains at the mercy of the USD price dynamics. Traders now look forward to the US ISM Services PMI for a fresh impetus, though the focus would be on the Bank of England meeting on Thursday and the US monthly jobs report (NFP) on Friday.

In the meantime, the ascending trend-channel support, near the 1.2135 area, might continue to protect the immediate downside. A convincing break below could prompt some technical selling and drag the GBP/USD pair further towards testing the 1.2100 mark. This is closely followed by the 200-period SMA on the 4-hour chart.

Some follow-through selling below the latter would be seen as a fresh trigger for bearish traders and make the GBP/USD pair vulnerable. The downfall could then accelerate towards the 1.2030-1.2025 intermediate support en-route the 1.2000 psychological mark and the next relevant support near the 1.1975-1.1970 horizontal zone.

On the flip side, the 1.2200 mark now seems to act as an immediate hurdle, above which the GBP/USD could climb back to the 1.2250 resistance. Sustained strength beyond the latter should pave the way for an extension of the recent recovery from the lowest level since March 2020 and allow spot prices to aim to conquer the 1.2300 level.

GBP/USD 4-hour chart

Key levels to watch