GBPUSD has declined considerably again after it failed to surpass the short-term moving averages from the beginning of the month. During the preceding week, cable reached a fresh more than two-year low of 1.2380 and touched the return line of the downward sloping channel.
The negatively aligned Tenkan-sen line serves as a testament to the negative short-term momentum that is in place. The RSI indicator is moving south in the bearish territory, while the %K line of the stochastic oscillator created a downside crossover with its %D line, suggesting an extension of the selling interest.
Immediate support to further declines may be taking place around the 1.2360 – 1.2380 support zone, while the 1.2100 handle, identified by the low on March 2017, could provide additional support in case of steeper losses.
A move to the upside may meet resistance near 1.2878, this being a peak recorded on July 12, with the area around it also encapsulating the 23.6% Fibonacci retracement level of the downleg from 1.3380 to 1.2380 near 1.2615. In case of stronger bullish movement could send prices towards the 38.2% Fibonacci mark of 1.2760.
To summarize, GBPUSD looks negative in the near-term, while in the medium-term the picture is seen bearish unless the price breaks above the descending channel, which has been holding since March 13.
