The GBP/USD pair continues its rejection fall from the previous day near a theoretically key 200-day SMA, around the 1.2425–1.2430 range, and stays under pressure during Wednesday’s Asian session. Spot prices are currently trading below the round figure of 1.2400, not far from the lowest point since early June.

Reduced wagers on the Bank of England’s (BoE) tightening policies more aggressively harm the British pound (GBP). This continues to be a headwind for the GBP/USD pair, coupled with the general bullish mood surrounding the US Dollar (USD). However, it appears that traders are hesitant to make risky wagers and prefer to wait it out until after the release of the most recent UK consumer inflation numbers. The highly anticipated FOMC policy decision, which is scheduled to be announced later during the US session and the BoE meeting on Thursday, will come next.

Prior to the significant data/central bank event risks, the Relative Strength Index (RSI) on the daily chart is already signalling somewhat oversold circumstances, helping to limit the downside for the GBP/USD pair. Nevertheless, the absence of any significant buying and the overnight failure close to the crucial 200-day SMA raise the possibility that the recent negative trend may still be far from ending. A well-established downturn is also indicated by the recent decrease along a downward-sloping channel, which benefits bearish traders.

According to the aforementioned technical pattern, the GBP/USD pair should move in the direction of least resistance, which is downward. As a result, it appears that a subsequent decline towards testing the May monthly swing low, in the range of 1.2310–1.2300, is a very real possibility. The aforementioned trend channel’s bottom limit, which is also in the aforementioned area, is where the depreciating move will likely extend if the trend channel is strongly broken. The spot price might then drop to the 1.2200 level before reaching the next important support area close to the 1.2150–1.2140 region.

On the other hand, any effort at a rebound above the 1.2400 level may continue to run into strong resistance close to the 1.2430–1.2435 range, or the 200-day SMA. A sustained increase in strength may lead to a short-covering rally and enable the GBP/USD pair to retake the psychological level of 1.2500. The momentum might be maintained near the swing high from last week, in the 1.2545–1.2550 range, but it might also draw new sellers. The latter should serve as a turning point that, if reached, might tip the scales in favour of bulls.

After that, the GBP/USD pair may rise to confront the hurdle in the ascending trend-channel, which is now situated just below the 1.2600 level. The 100-day SMA barrier, which is now set at about 1.26900, is the next hurdle to be overcome. If it is, it will signal that spot prices have established a short-term bottom and open the door to a significant appreciating move.

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