In the European session on Thursday, the GBP/USD is regaining ground over 1.2150. The pair benefits from a slowdown in the US Dollar’s ascent, but additional gains remain elusive amid a gloomy mood and ahead of mid-tier US data releases.

The 4-hour chart’s Relative Strength Index (RSI) indicator remains well below 30, and GBP/USD trades just below the lower limit of the descending regression channel, confirming oversold conditions. If the pair experiences a technical correction, resistance might be found at 1.2200 (20-period SMA, mid-point of the descending regression channel), 1.2240 (upper limit of the descending channel), and 1.2300 (psychological level, 50-period SMA).

On the downside, 1.2130 (static level from February) aligns as immediate support before 1.2100 (psychological level, static level) and 1.2050 (static level).

On Tuesday, the GBP/USD broke below 1.2200 and fell to a new six-month low below 1.2150. The pair is still oversold in the short run, according to the technical picture. Investors, on the other hand, may choose to wait for a consistent improvement in risk sentiment before positioning themselves for a decisive comeback in the pair.

GBP/USD Price Chart – Source: Tradingview
GBP/USD Price Chart – Source: Tradingview

Wall Street’s main indexes lost more than 1% on Tuesday amid growing fears over a US government shutdown. Although US stock index futures trade modestly higher, participants could refrain from betting on a risk rally unless Republicans and Democrats agree on a bipartisan spending bill ahead of Sunday’s deadline.

The US Census Bureau will issue Durable Goods Orders statistics for August later in the day. Markets anticipate a 0.5% decline, following a 5.2% drop in July. If there is another significant drop in these data, the initial reaction may be negative for the USD.

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On Thursday, the US Department of Treasury will perform a 5-year US Treasury note auction during the American session. The USD may lose strength if there is a strong demand for bonds and a noticeable decrease in the high-yield outcome. Nonetheless, investors are likely to remain focused on US political events.


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