- GBP/USD attracts sellers for the third straight day on Tuesday amid a broadly firmer USD.
- The downside seems limited ahead of the UK Autumn budget and the key FOMC decision.
- The technical setup further warrants some caution before placing aggressive bearish bets.
The GBP/USD pair drifts lower for the third straight day on Tuesday, extending its recent pullback from the highest level since September 16, around the 1.3420 area, touched last week. Spot prices dropped to a one-week low during the first half of the European session and currently trade around the 1.3320 region, down 0.15% for the day amid sustained US Dollar (USD) buying.
The downside, however, seems limited as traders might opt to wait on the sidelines ahead of the key event risks on Wednesday. UK Chancellor John Healey will deliver his first Autumn Budget amid Prime Minister Andy Burnham’s big spending plans. This will be followed by the crucial US Federal Reserve (Fed) decision at the conclusion of a two-day meeting, which will influence the USD price dynamics and provide a fresh impetus to the GBP/USD pair.
From a technical perspective, spot prices hold a mildly capped tone following the recent failed attempt to find acceptance above the 200-day Exponential Moving Average (EMA) at 1.3401. The GBP/USD pair slides to the mid-range of the recent Fibonacci retracement, with immediate support emerging at the 38.2% level near 1.3311. Meanwhile, the Moving Average Convergence Divergence (MACD) indicator remains above zero, with the line still positive but contracting.
Furthermore, the Relative Strength Index (RSI) hovers just under the 50 mark, hinting at improving yet still fragile momentum against a broader bearish structural backdrop. Hence, some follow-through weakness below the 38.2% Fibo. would expose the 50.0% level at 1.3278 and the deeper 61.8% retracement at 1.3244, which collectively define a consolidation floor for pullbacks.
On the topside, resistance aligns first at the 23.6% retracement at 1.3353, ahead of the 200-day EMA at 1.3401 and the recent swing high around 1.3420. A daily close above this cluster would be needed to ease the current bearish cap and open the way for a more sustained recovery.
- GBP/USD Price Forecast: Drops to one-week low near 1.3320, 38.2% Fibo. on firmer USD
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