- A combination of factors prompted some fresh selling around GBP/USD on Tuesday.
- COVID-19 jitters, Brexit woes continued acting as a headwind for the British pound.
- Upbeat US CPI report pushed the USD higher and added to the intraday selling bias.
GBP/USD has plummetted to 1.38, down some 80 pips on the day. US CPI beat estimates with 5.4%. Earlier, sterling benefited from the UK's insistence to reopen the economy next week.
The Cable has been benefiting from upside momentum on the four-hour chart and has recaptured the 100 Simple Moving Average. Moreover, the Relative Strength Index (RSI) is still below 70, allowing for more gains. Overall, bulls are in the lead
Moreover, 4-hour MACD has diverged in favor of the bulls. MACD histograms has produced higher lows , contradicting lower lows on the price chart. That bullish divergence indicates a potential for a corrective bounce which confirms the triangle pattern after the breakout
Significant resistance awaits at 1.3910, which held GBP/USD down in recent days. It is followed by 1.3940, a cap from late June, and then by 1.40. Support is at 1.3840, the weekly low, followed by 1.3785, 1.3750 and 1.3735 – the latter being a multi-month low.
