The British Pound continues to rebound from the key support level near 1.2730, riding the wave of a weakening US Dollar in sluggish markets influenced by mixed factors.
Buyers are optimistic as technical indicators point to an upward trend, pushing the currency pair towards a significant short-term resistance level and potentially surpassing the yearly high reached earlier this month.
The rebound of the RSI (14) line from oversold levels has now reached the 50.0 mark, signaling the acceptance of buyers for the Cable pair’s recent reversal from the upward-sloping support line since June 5, near 1.2700 at present.
As a result, GBP/USD bulls are now targeting a descending resistance line established one week ago, located around 1.2760.
Nevertheless, caution arises from bearish MACD signals and the possibility of the US Dollar recovering, driven by hawkish signals from the Federal Reserve. These factors pose challenges for Pound Sterling buyers.
If the quote manages to rise above 1.2760, the focus will shift towards the round figure of 1.2800 and the monthly high near 1.2850, which represent the highest levels since April 2022.
Conversely, a downside break of the 1.2700 support, which includes the aforementioned upward trend line, does not automatically invite GBP/USD bears to dominate the market. Attention should be given to a horizontal area between 1.2640 and 1.2650, encompassing multiple levels that have been significant since early May, before welcoming sellers.
Additionally, the 100-day simple moving average (SMA) at approximately 1.2625 and an upward-sloping support line from May 25 around 1.2500 act as short-term obstacles on the downside.
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