GBPUSD fades the corrective pullback from a two-year low, as well as the 61.8% FE level of late March-May moves. Also supporting the bounce was the oversold RSI condition. However, the Bank of England’s (BOE) looming rate hike keeps buyers on their toes due to the “Old Lady’s” previous failures to impress. That said, the recovery moves currently need a clear upside break of the previous monthly low of 1.2155 to convince buyers. Should the BOE manage to favor the bulls, a run-up beyond the 1.2155 could aim for a seven-week-old horizontal resistance zone surrounding 1.2410-20. It’s worth noting that the cable pair’s run-up past 1.2420 remains doubtful as a descending resistance line from February precedes the 50-DMA, respectively around 1.2500 and 1.2610, to challenge the optimists.
On the contrary, the 1.2000 threshold acts as the immediate support ahead of the 61.8% FE level of 1.1960. During the GBPUSD pair’s weakness past 1.1960, the 78.6% FE and a downward slopping support line from March, around 1.1760 and 1.1700 in that order, will be crucial to watch as the RSI might have offered another corrective bounce by then. If not then the quote becomes vulnerable to testing the 100% FE level of 1.1510.
Overall, GBPUSD is likely to extend the latest recovery as traders position themselves for the BOE. However, the upside momentum remains elusive.