GBPUSD has been trading sideways since breaking below its 50-day moving average last week. The shift to a more neutral stance follows a prior range that was capped at the key 1.3000 level after a decline from the multi-month high of 1.3267 reached on August 3.
The pair has been trading between two important Fibonacci retracement levels of the rise from 1.2588 to 1.3267. The 50% Fibonacci at 1.2927 is capping the top of the range while the 61.8% Fibonacci is providing support at 1.2845.
Only a break of 1.2927 (50% Fibonacci) and a rise above the 50-day MA would ease downside pressure to target 1.3000. This is a strong resistance level and a break of this would shift the focus back to the upside for a re-test of 1.3267.
The near-term bias is expected to remain neutral with further range trading as RSI is moving sideways. But since the indicator is below 50 in bearish territory and MACD is falling, another leg lower cannot be ruled out yet. A break below the 5-week low touched last Friday at 1.2831 would increase downside momentum with scope to test the key 1.2800 level ahead of 1.2720. From here the 200-day MA and 1.2588 low come into view as potential targets.
The overall risk remains to the downside and the bearish move from 1.3267 is still intact.