GBPUSD has rebounded somewhat after falling to a 20-month low of 1.2475 on December 12 and momentum indicators are endorsing that the market sentiment might get better and create some gains in the daily timeframe. The RSI indicator is sloping slightly up in the negative territory, while the MACD oscillator is also looking to change direction and is ready to create a bullish crossover with its trigger line in the bearish zone.
Should upside movement dominate in the near term, the market might revisit the 1.2690 resistance level before meeting the 20-day simple moving average (SMA) around 1.2710. Above that, the area around the 40-day SMA near 1.2805 could be the next level for investors to look for. Steeper increases may overcome that point and test the 1.2925 barrier, which is the 23.6% Fibonacci retracement level of the downleg from 1.4375 to 1.2475. Also, the long-term descending trend line could act as strong obstacle for the bulls.
Alternatively, if the price manages to move lower again, support could come from the previous trough at 1.2475. Further down, the price could rest around the 1.2360 hurdle, taken from bottom on April 2. A rally beneath this region would increase chances that the downtrend is in progress and challenge the 1.2100 psychological level.
To sum up, in the long-term view, the downfall from 1.4375 is still active and hence the outlook remains negative.
