GBP/USD could face further bearish pressure if 1.2050 support fails

GBP/USD has failed to reclaim 1.21 following the earlier recovery attempt. The pair faces significant support at 1.2050 and sellers are likely to dominate the pricing action if that level fails, FXStreet’s Eren Sengezer reports.

Bears to take action with a drop below 1.2050

“In case the market environment remains risk-positive in the second half of the day, GBP/USD's downside could remain limited. Nevertheless, market participants are unlikely to bet on a steady rebound in the pair ahead of the highly-anticipated US inflation report on Wednesday.”

“The Fibonacci 50% retracement level of the latest uptrend forms significant support at 1.2050. In case sellers drag the pair below that level, additional losses toward 1.2000 (psychological level, Fibonacci 50% retracement) and 1.1920 (static level) could be witnessed.”

On the other hand, 1.2100 (psychological level, Fibonacci 38.2% retracement) aligns as significant resistance. If the pair starts using that level as support, technical recovery could stretch higher toward 1.2150 (50-period SMA) and 1.2175 (Fibonacci 23.6% retracement).”