• GBP/USD retreats toward 1.2150 as the US Dollar rebounds despite risk-recovery.
• Focus shifts to the US economic data after the surprise BoJ move-led volatile trading.
• Pound Sterling clings to 21DMA, with lower highs formed on the daily chart.

GBP/USD is struggling to extend the previous rebound from below 1.2100, reversing toward 1.2150 after running into strong offers just shy of the 1.2200 barrier. The US Dollar is making minor upside attempts, tracking the positive tone in the US Treasury yields, despite the recovery in risk sentiment.

The downside in the GBP/USD pair, however, remains cushioned, as the higher-yielding Pound Sterling finds some support from the return of risk flows. Markets look to stabilize after Tuesday’s Bank of Japan (BoJ) surprise move-led sharp sell-off in bonds and stocks.

From a short-term technical perspective, the GBP/USD pair managed to defend the mildly bullish 21-Daily Moving Average (DMA), now at 1.2174 on Tuesday.

At the time of writing, the pair continues its struggle around that barrier, with the immediate support of 200DMA at 1.2086 remaining exposed.

Daily closing below the critical 200DMA will initiate a fresh downswing toward the bullish 50DMA at 1.1800.

The bullish 14-day Relative Strength Index (RSI) and double Bull Cross confirmation could overpower the rising wedge pattern, for now, allowing bulls some respite.

Although the lower highs formed on the daily sticks so far this week warrant caution for GBP bulls.  

GBP/USD: Daily chart

On the upside, Cable needs a sustained move above the 21DMA before attacking the 1.2200 barrier. Further up, bulls will aim for

The next significant upside targets are aligned at Monday’s high at 1.2242 and the 1.2250 psychological level.

GBP/USD: Additional technical levels