The GBP/USD pair is trimming its monthly losses, the first in three, hovering around 1.2360 in early Monday trading, as both UK and US markets remain closed for the Memorial Day holiday.
Despite the debt ceiling extension agreement between Biden and McCarthy, the US Dollar retreats from its recent multi-day high, supporting the Cable’s rebound from April levels.
Technical indicators like the RSI line below the 50 mark (located at 14) and the 100-Exponential Moving Average (EMA) are acting as support, providing a floor for the Pound Sterling pair near the key 1.2300 level.
However, the bearish signals from the MACD and the presence of resistance around 1.2400, which includes the 50-EMA and a descending trend line formed over the past two weeks, are limiting immediate upward movements for the GBP/USD pair.
In the event of a bullish breakout, the recent highs at 1.2440 and 1.2585, seen in late 2022 and last month respectively, may pose as the final barriers for bearish sentiment surrounding the Cable.
On the contrary, a downward breach of the 100-EMA near 1.2300 does not necessarily imply an open invitation for Pound Sterling bears, as an upward-sloping support line originating from November 2022, approximately at 1.2230, could impede further downside potential.
Nevertheless, if the 1.2230 support level is clearly breached, it would likely challenge the psychological round figure of 1.2000 before heading towards the early 2023 low around 1.1840.
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