GBP/USD Price Analysis: Remains poised to retest 1.2975 amid a busy docket
- GBP/USD remains exposed to downside risks and eyes 1.2975 support.
- Bailey, Powell widened the policy divergence, smashing cable.
- UK/US PMIs, Bailey eyed but little relief seen in sight for GBP bulls.
GBP/USD is consolidating the rebound from just above 1.3000, as bears take a breather ahead of the UK and US S&P Global Preliminary business PMI reports.
Cable lost nearly 60-pips on Thursday, as the monetary policy divergence between the Fed and the Bank of England (BOE) widened after Fed Chair Jerome Powell endorsed aggressive policy tightening.
Meanwhile, BOE Governor Andrew Bailey stuck to its cautious tone, wary about the growth prospects amid labor market weakness and raging inflation.
Ahead of the key PMIs releases, the sentiment around the dollar and the yields will continue to dominate GBP/USD trades. Also, in focus remains the speech by Bailey at the IMF event this Friday.
Looking at GBP/USD’s daily chart, the price tumbled after failing to find acceptance above the 21-Daily Moving Average (DMA), now at 1.3073.
The bearish 14-day Relative Strength Index (RSI) continues to indicate the odds of more downside.
Immediate support is seen at the 1.3000 level for GBP bulls. Further down, sellers will target 1.2975, which is the confluence zone of the April 13 and 19 lows.
Deeper declines will expose the falling channel support at 1.2903. Note that the major has been traversing within a bullish channel since the downtrend kicked in on March 23.
GBP/USD: Daily chart
Until the 21-DMA is taken out on a sustained basis, sellers will likely keep the control.
If bulls succeed in cracking the latter, then the channel resistance at 1.3089 will challenge the bearish commitments.
Further up, the 1.3100 mark will be the level to beat for GBP buyers.
GBP/USD: Additional technical levels