GBP/USD has remained humbled since the latter part of last year as the pair continues to be influenced by geopolitics.
For the safe-haven US dollar, an aggressive US Federal Reserve and tighter monetary policy has favored the greenback, allowing it to appreciate against its major counterparts, including the Sterling.
From a technical standpoint, the downward trajectory of GBP/USD has remained intact, forcing the pair to test a critical zone of support around the key psychological level of 1.22.
After falling from the April 2018 high of 1.437, the onset of the coronavirus pandemic and subsequent global lockdowns, drove GBP/USD to a low of 1.141 in March 2020 before rebounding back above the 1.22 handle. Just over two-years later and price action has found itself revisiting the same zone with both buyers and sellers desperate to break free from the shackles of this range.
GBP/USD Monthly Chart
Source: TradingView
Meanwhile, the daily chart further illustrates the manner in which Fibonacci levels from historical moves have formed prominent zones of confluency, holding both bulls and bears at bay.
Rising US recession fears have recently weighed on US dollar strength, allowing GBP/USD to climb back towards the next big level of resistance at 1.23. A confirmed break higher would pave the way for the a renewed test of the 1.24 level.
The recent formation of low-bodied candles are suggestive of indecision,and a break of trendline resistance and the above-mentioned levels may provide bulls the opportunity to gain traction throughout the quarter, capping any further downside for cable.
GBP/USD Daily Chart
Source: TradingView
However, if the downtrend persists, a break of 1.200 and of 1.9347 (the June 2022 low) may result in an increase in bearish momentum, opening the door for a re-test of the March 2020 low at 1.141.
