The GBP/USD pair dropped to the lowest level since December 2020 during the early part of the European session, albeit quickly recovered a few pips thereafter. The pair was last seen trading with only modest intraday losses, just below the 1.3400 mark.

The pair struggled to capitalize on its attempted recovery move on Thursday, instead met with some fresh supply near the 1.3430-35 region in reaction to disappointing UK macro data. The Preliminary UK GDP report or the first estimate showed that the economy expanded by 1.3% during the July-September period. This marked a sharp deceleration from the 5.5% growth reported in the previous quarter and was worse than 1.5% anticipated. 

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

Currently, GBP/USD is trading near the lower limit of the descending regression channel coming from late October.

The Relative Strength Index (RSI) on the four-hour chart is staying below 30. When the RSI broke below 30 with the initial reaction to the BoE's decision to leave the policy rate unchanged, the pair staged a rebound and gained more than 100 pips in the next few days. A similar recovery could get underway before the pair extends its slide but the above-mentioned fundamental drivers are likely to limit the pair's upside.

Initial resistance is located at 1.3440 (mid-point of the descending channel, former support) ahead of 1.3480 (upper limit of the descending channel) and 1.3500 (psychological level, 20-period SMA, static level).

On the downside, supports are located at 1.3360 (static level) and 1.3300 (psychological level, static level).

GBPUSD finding support at 38.2% fibo

Nov 11 2021