GBP/USD Price Analysis: 1.1700 appears under threat after bear flag confirmation

• GBP/USD is at two-year lows, with a break below 1.1700 inevitable.
• The US dollar cheers Powell’s comments-led risk-off sentiment.
• Bear flag confirmation on the 1D chart opens more downside for cable.

GBP/USD is closing in on 1.1700, extending Friday’s decline amid an extension of risk-off sentiment and the US dollar recovery. Asian traders react negatively to Fed Chair Jerome Powell’s Jackson Hole remarks, as reflective of the 0.80% drop in the US S&P 500 futures in opening trades.

Expectations of higher rates for longer have ramped up after Powell’s comments, stoking growth fears and boding ill for global stocks. Investors continue to seek refuge in the safe-haven US dollar at the expense of high-beta currencies such as the British pound.

Meanwhile, the UK currency battles a dire economic outlook amid surging energy costs, which accentuates the country’s cost-of-living crisis. Looking ahead, the moves in the major could be exaggerated amid low volumes and minimal volatility, as the British traders are away, observing the Summer Bank holiday on Monday.

Amidst a lack of top-tier US economic data, traders will await Fed official Lael Brainard’s speech for fresh trading impetus.

As observed on cable’s daily chart, the downside break below the rising trendline support at 1.1777 on Friday has confirmed a bearish flag.

The downtrend could now extend towards the 1.1650 psychological level. Ahead of that the 1.1705 demand area will challenge the bullish commitments. That zone is the confluence of the two-year lows and the falling (dashed) trendline.

Also read: GBP/USD Weekly Forecast: Braces for more pain in the NFP week ahead

The 14-day Relative Strength Index (RSI) inches lower while sitting just above the oversold region, suggesting that there is more room for a downside move. Adding credence to the bearish potential, the 21 and 50-Daily Moving Averages (DMA) bearish crossover confirmed earlier this week also remains in play.

Alternatively, bulls need a sustained move above the rising trendline resistance at 1.1879 to negate the near-term bearish bias. The next significant upside target is aligned at 1.1900 the round figure. The August 19 high at 1.1937 will be next on buyers' radars.

GBP/USD: Daily chart

GBP/USD: Additional technical levels