- The overnight strong recovery once again faltered near the 1.2340-50 confluence zone.
- Disappointing UK construction PMI does little to provide any respite to the British Pound.
The GBP/USD pair on Tuesday staged a solid intraday bounce of over 125 pips from the 1.2200 neighbourhood – a support marked by 61.8% Fibonacci level of the 1.1958-1.2583 recent strong move up. The uptick, however, lacked any strong follow-through and once again faltered near the 1.2340-50 supply zone.
The mentioned barrier marks a confluence region – comprising of 200-hour EMA and 38.2% Fibonacci level – and should now act as a key pivotal point for short-term traders. The pair met with some fresh supply on Wednesday and remained depressed following the release of yet another disappointing UK construction PMI.
Meanwhile, technical indicators on hourly charts maintained their bearish bias and have just started drifting into the bearish territory on the daily chart. The set-up support prospects for a further depreciating move back towards the 1.2235-30 intermediate support en-route the 1.2200 round-figure mark.
Failure to defend the mentioned handle, leading to a subsequent break below the 1.2170-65 horizontal zone will set the stage for a slide back towards testing sub-1.2100 levels. On the flip side, the 1.2280-85 region now seems to act as immediate resistance and any further recovery beyond the 1.2300 handle seems more likely to remain capped near 1.2340-50 region.
GBP/USD 4-hourly chart