“¢ The GBP/USD pair managed to find decent support near the 1.2600 handle and recovered a major part of its early slide to fresh 4-1/2 month lows.
“¢ In absence of any fresh fundamental catalyst, the intraday rebound could be solely attributed some short-covering amid highly oversold conditions.
Given this week’s bearish break through the 1.2700-1.2680 horizontal support, the rebound runs the risk of fizzling out rather quickly and might still be seen as a selling opportunity near the mentioned support break-point.
Moreover, the fact that the pair remains well below its important moving averages – 50, 100 & 200-day SMA further add credence to the near-term bearish outlook amid the ongoing Brexit-related UK political chaos.
Meanwhile, the 50-day SMA is now looking to cross below the very important 200-day SMA, forming a death cross and indicating the potential for a major selloff back towards challenging the key 1.2500 psychological mark.
The bearish trajectory could further get extended towards yearly lows support around the 1.2400-1.2395 region – or near 21-month lows set in January, en-route the next static support near the 1.2370-65 region.
GBP/USD daily chart