GBP/USD Price Analysis: Bulls looking to seize control amid heavy USD selling

• GBP/USD catches fresh bids on Monday and is supported by a combination of factors.
• Reversal of the UK government’s controversial fiscal package boosts the British pound.
• Retreating US bond yields, the risk-on mood weighs on the USD and remains supportive.

The GBP/USD pair regains positive traction on the first day of a new week and builds on its steady intraday ascent through the early North American session. The momentum lifts spot prices to a fresh daily high, around the 1.1365-1.1370 region, and is sponsored by a combination of factors.

The British pound draws support from the latest optimism over the reversal of the new UK government's controversial fiscal package. The US dollar, on the other hand, is pressured by a combination of factors and provides an additional boost to the GBP/USD pair. Retreating US Treasury bond yields, along with the risk-on impulse, turn out to be key factors undermining the safe-haven greenback.

From a technical perspective, the GBP/USD pair now seems to have found acceptance above the 200-period SMA on the 4-hour chart. This, in turn, supports prospects for an extension of last week's bounce from the 50% Fibonacci retracement level of the recent recovery from an all-time low. The positive outlook is reinforced by bullish oscillators, which are still far from being in the overbought zone.

Some follow-through buying above Friday's swing high, around the 1.1380 region, will reaffirm the bullish bias and lift spot prices beyond the 1.1400 round-figure mark. The upward trajectory could further get extended and allow the GBP/USD pair to aim back to challenge the monthly swing high, just ahead of the 1.1500 psychological mark.

On the flip side, the 1.1300 round figure now seems to protect the immediate downside. Any subsequent decline is likely to attract fresh buyers near the 23.6% Fibo. level, around the 1.1215-1.1210 region. This is closely followed by the 1.1200 mark, which if broken decisively will suggest that the momentum has run out of steam and shift the bias in favour of bearish traders.

The GBP/USD pair might then turn vulnerable to weaken further below mid-1.1100s, Friday's swing low, and drop to the 1.1100 round-figure mark. The next relevant support is pegged near 38.2% Fibo. level, around the 1.1055-1.1050 region. The latter should act as a strong base for spot prices and a key pivotal point for short-term traders.

GBP/USD 4-hour chart

Key levels to watch