GBP/USD has reversed its direction and declined to the 1.2050 area after having recovered toward 1.2100 earlier in the session. The US Dollar holds its ground as focus shifts to PCE inflation figures for November.

The Relative Strength Index indicator on the four-hour chart stays near 40, suggesting that the latest recovery was a technical correction rather than a reversal. The USD bulls, however, prefer to wait for the release of the US Personal Consumption Expenditure (PCE) data later during the early North American session.

 Additionally, GBP/USD struggles to pull away from the 200-period Simple Moving Average (SMA), which is currently located at around 1.2050. 

If the pair stays below 1.2050 and confirms that level as resistance, it could test 1.2000 (psychological level) before extending its slide toward 1.1925 (Fibonacci 38.2% retracement of the latest uptrend). Even so, the Cable pair’s sustained trading below the one-month-old ascending trend line, broken on Wednesday, joins the bearish MACD signals to keep sellers hopeful.

On the upside, 1.2100 (20-period SMA, Fibonacci 23.6% retracement) forms key resistance. In case buyers manage to flip that level into support, additional gains toward 1.2200 (static level, 100-period SMA, 50-period SMA) could be witnessed. 

The Core PCE Price Index, the Fed's preferred inflation gauge, will provide fresh cues on inflation and influence the US central bank's rate-hike path. This, in turn, will play a key role in driving the USD demand in the near term and help investors to determine the next leg of a directional move for the GBP/USD pair.

GBPUSD going for another dip before hawkish continuation

Dec 23 2022

Take Profit +4.95%

Holding time 91d6hr

1.19328

Entry price

1.25236

Take profit price