• A combination of factors prompted some selling around GBP/USD on Wednesday.
• Softer UK CPI print weighed on the GBP amid a modest pickup in the USD demand.
• The set-up supports prospects for the emergence of some dip-buying at lower levels.

The GBP/USD pair dropped to fresh daily lows, around 1.3765-60 region during the early part of the European session and has now eroded a part of the overnight gains to one-month tops.

A combination of factors failed to assist the GBP/USD pair to capitalize on its modest intraday uptick on Wednesday, instead prompted some selling around the 1.3815 region. The British pound was weighed down by a softer-than-expected UK CPI print for September. Apart from this, a goodish pickup in the US dollar demand extended some downward pressure on the major.

Looking at the technical picture, the recent strong positive move from the vicinity of the 1.3400 mark stalled on Tuesday near the 1.3830-35 confluence hurdle. The mentioned region comprises the very important 200-day SMA and the top boundary of an upward sloping channel extending from late September, which should act as a pivotal point for short-term traders.

Meanwhile, technical indicators on the daily chart maintained their bullish bias and have also eased from the overbought territory on the 4-hour chart. The formation of an ascending channel, along with bullish oscillators support prospects for the emergence of dip-buying. This, in turn, should help limit any meaningful corrective pullback for the GBP/USD pair.

Hence, any subsequent slide might be seen as a buying opportunity around the 1.3760-50 horizontal support. This is followed by weekly swing lows, around the 1.3710-05 region, which should act as a strong base for the GBP/USD pair. A convincing break below might trigger some technical selling and expose the descending trend-channel support near mid-1.3600s.

On the flip side, the 1.3800 round-figure mark now seems to act as immediate resistance. Some follow-through buying has the potential to push the GBP/USD pair back towards the 200-DMA/ascending channel confluence hurdle, currently around the 1.3840-45 region. A sustained move beyond should pave the way for an extension of the recent appreciating move.

The GBP/USD pair might then aim back to reclaim the 1.3900 round-figure mark. The momentum could further get extended beyond the 1.3960-65 intermediate resistance, en-route the next major hurdle near the key 1.4000 psychological mark.

GBP/USD daily chart

Technical levels to watch