The GBP/USD pair extended its intraday descent through the first half of the European session and dropped back closer to the overnight low, around the 1.3160-1.3155 area in the last hour.

Following an early uptick to the 1.3225 area, the GBP/USD pair met with a fresh supply on Friday and drifted into the negative territory for the third successive day. The Bank of England's softer view on the need for further rate hikes acted as a headwind for the British pound, which was further pressured by the disappointing UK macro data.

Weaker dollar in European trading on Friday helped sterling ahead of pivotal support at 1.3150 (50% retracement of 1.3000/1.3298, reinforced by 10DMA), after the action was already rejected at this zone on Thursday.

Technical studies on daily chart lack clearer direction signal as bullish momentum is rising but stochastic is heading south and 10/20DMA’s are in mixed mode.
Watch the action around 1.3150, as firm break here would encourage sellers and risk test of Fibo supports at 1.3114 and 1.3071 (Fibo 61.8% and 76.4% of 1.3000/1.3298 respectively) which guard key 1.30 level.

At the upside, initial barrier lays at 1.3245 (Fibo 38.2% of 1.3642/1.3000) followed by 1.3298 (Mar 23 recovery peak), violation of which would bring bulls back to play.

That said, a generally positive risk tone continued undermining the safe-haven US dollar and extended some support to the GBP/USD pair, at least for the time being. The Fed's more hawkish outlook, however, should help limit deeper losses for the buck. This, in turn, suggests that the path of least resistance for spot prices is to the downside. Hence, any positive move is more likely to get sold into and fizzle out rather quickly.

Positive Risk Tone Undermined on GBPUSD Below H4 Highs

Mar 25 2022