GBP/USD Price Analysis: Holds steady around 1.2300, just below ascending channel resistance

• GBP/USD retreats a bit from a multi-month high, though lacks follow-through.
• The technical setup still favours bulls and supports prospects for further gains.
• A sustained break below the 200 DMA is needed to negate the positive outlook.

The GBP/USD pair reverses a mid-European session dip to the 1.2235-1.2230 area and remains well within the striking distance of its highest level since June 17 touched earlier this Monday.

The attempted intraday US Dollar recovery from over a five-month low lacks bullish conviction amid bets that the Fed will slow the pace of its policy tightening as soon as in December. This, in turn, is seen as a key factor lending support to the GBP/USD pair. That said, a bleak outlook for the UK economy acts as a headwind for the British Pound and keeps a lid on spot prices, at least for now.

From a technical perspective, the top end of over a two-month-old upward-sloping channel, currently around mid-1.2300s, continues to cap the upside for the GBP/USD pair. That said, last week's sustained move and acceptance above a technically significant 200-day Simple Moving Average (SMA) for the first time in 2022 support prospects for an eventual breakout through the ascending channel.

That said, oscillators on the daily chart have moved on the verge of breaking into the overbought zone and warrant some caution. This makes it prudent to wait for some near-term consolidation or a modest pullback before positioning for the next leg up. Nevertheless, the bias still seems tilted firmly in favour of bullish traders and supports prospects for a further near-term appreciating move.

In the meantime, the daily low, around the 1.2235-1.2230 region, now seems to protect the immediate downside ahead of the 1.2200 round-figure mark. Any subsequent decline could still be seen as a buying opportunity and remain limited near the 1.2150 region (200-DMA). The latter should act as a pivotal point, which if broken decisively will negate the positive outlook for the GBP/USD pair.

GBP/USD daily chart

Key levels to watch