- A sudden pickup in the USD demand prompted some profit-taking around GBP/USD.
- Break below 1.3860-55 confluence support might pave the way for further downside.
- Mixed technical indicators warrant some caution before placing any aggressive bets.
The GBP/USD pair witnessed an intraday turnaround from 34-month tops and slipped below the 1.3900 round-figure mark during the early North American session.
The US dollar staged a solid rebound from three-week lows amid some strong follow-through upsurge in the US Treasury bond yields. This, in turn, was seen as a key factor that prompted some profit-taking around the GBP/USD pair.
Despite the intraday pullback of around 75 pips, the GBP/USD pair, so far, has managed to hold above the 1.3860-55 confluence support. The mentioned region comprises of 100-hour SMA and ascending trend-line, extending from monthly lows.
Meanwhile, technical indicators on the 1-hourly chart have been gaining bearish traction. However, oscillators on 4-hourly/daily charts are still holding comfortably in the positive territory and warrant caution for bearish traders.
Hence, it will be prudent to wait for a convincing break through the 1.3860-55 confluence support before confirming that the GBP/USD pair might have topped out in the near-term. This, in turn, will set the stage for additional weakness.
The GBP/USD pair might then turn vulnerable to accelerate the corrective slide towards the 1.3800 mark. Any further decline might still be seen as a buying opportunity and remain limited near the 1.3760-55 congestion zone.
On the flip side, the 1.3950 region, or near three-year tops set earlier this Tuesday, now becomes immediate resistance. A sustained strength beyond has the potential to lift the GBP/USD pair towards the key 1.4000 psychological mark.
GBP/USD 1-hourly chart
Technical levels to watch
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