GBP/USD Price Analysis: Stays firm despite retreating at 1.2800 as bears loom

• GBP/USD maintains gains at 1.2786, up 0.14% from daily high.
• Resistance trendline and overbought RSI hint at potential correction.
• Short-term bearish engulfing pattern signals possible downward pressure.

The British Pound demonstrated its resilience against the Greenback on Tuesday, maintaining its gains as traders in the UK and the US returned after a long weekend. The GBP/USD is currently trading at 1.2786, showing a steady increase of 0.14% from its daily high of 1.2800.

GBP/USD Price Analysis: Technical outlook

The GBP/USD tested the 1.2800 figure, yet a confluence of technical indicators with a downslope resistance trendline drawn from the highs of July 2023 and the March 21 cycle high at around 1.2803, pushed the exchange rate back to current spot prices. Momentum is in favor of buyers, but the Relative Strength Index (RSI) is about to turn overbought, hinting the pair could be headed for a correction.

In the short term, the GBP/USD hourly chart has formed a ‘bearish engulfing’ candle chart pattern, an indication that a leg-down is underway. Additionally, bullish momentum is fading as the Relative Strength Index (RSI) aims toward the 50 midline, which, once crossed, could exert downward pressure on the major.

Key support levels lie at the current day’s low of1.2762, followed by the confluence of the 50-simple moving average (SMA) at 1.2759, followed by the confluence of the100-SMA and the S1 pivot point at around 1.2736/39, ahead of the 200-SMA at 1.2716.

Conversely, if buyers stepped in and pushed prices above 1.2803, look for a re-test of the year-to-date (YTD) high of 1.2893.

GBP/USD Price Action – Hourly Chart