GBP/USD is struggling to gain any meaningful upside traction above 1.2300 in early Europe. The pair remains supported as the US Dollar licks its wounds amid weaker US Treasury yields and cautious trading ahead of the Fed policy announcements.
From a technical perspective, the recent failure near the 1.2450 area seems to constitute the formation of a bearish double-top pattern on the daily chart. That said, the lack of a strong follow-through selling warrants some caution before confirming that the GBP/USD pair has topped out.
Moreover, oscillators on the daily chart, though have been losing traction, are still holding in bullish territory. Hence, any meaningful slide below the 1.2300 mark could find some support near the 1.2250 region, which if broken decisively should pave the way for deeper losses.
Spot prices might then turn vulnerable to weaken further below the 1.2200 mark, toward testing the next relevant support near the 1.2175 region. The downward trajectory could get extended further towards the 1.2130-1.2125 zone en route to the 1.2100 round figure.
On the flip side, the 1.2400 mark now seems to have emerged as an immediate strong barrier ahead of the one-month high, around the 1.2445 area touched last Wednesday. Some follow-through buying should allow the GBP/USD pair to reclaim the 1.2500 psychological mark for the first time since June. The momentum could eventually lift spot prices towards the 1.2555-1.2560 hurdle, above which bulls might aim to test the 1.2600 mark.
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