Be it recession fears or the UK’s political crisis, GBPUSD has to bear it all as it dropped to the lowest level since March 2020. However, the cable pair appears to have a limited downside room before hitting the key supports. That said, a nearly oversold RSI and a falling wedge bullish chart pattern near the multi-month low also tease buyers to take the risk. It should be noted, however, that a downside break of the 1.1770 mark, comprising the wedge’s support line and 78.6% Fibonacci Expansion (FE) of late March-May moves, will defy the bullish hopes. Following that, the 100% FE level surrounding 1.1520 may offer an intermediate halt before dragging the quote to the year 2020 bottom close to 1.1410.
Meanwhile, recovery moves may initially struggle around the 61.8% FE level near 1.1950 before regaining the 1.2000 mark. Though, bulls will be interested in seeing a successful break of the 1.2100 mark as it confirms the falling wedge bullish formation. In that case, theory suggests a run-up towards the 1.2800 round figure but the 50-DMA and May’s top could challenge the buyers respectively around 1.2360 and 1.2565.
Overall, GBPUSD sellers appear to have run out of steam but the bulls need validation.