• GBP/USD struggles to capitalize on the previous day’s strong move up to the weekly top.
• Escalating US-Iran tensions and Fed hike bets revive USD demand, weighing on the pair.
• Bears seem hesitant amid the mixed technical setup and ahead of the BoE rate decision.

The GBP/USD pair meets with fresh supply on Thursday and retreats further from the weekly high, around the 1.3385-1.3390 region, touched the previous day. Spot prices stick to modest intraday losses through the first half of the European session and currently trade around mid-1.3300s amid a broadly firmer US Dollar (USD).

Following the previous day's post-FOMC decline, the USD regains positive traction as rapidly changing inflationary dynamics due to volatile oil prices keep the US Federal Reserve (Fed) rate hike bets firmly on the table. Apart from this, escalating US-Iran tensions turn out to be another factor underpinning the safe-haven Greenback. The downside for the GBP/USD pair, however, seems cushioned as traders opt to wait for the crucial Bank of England (BoE) decision and important US macro data.

From a technical perspective, the previous day's strong move up faced rejection near the 100-period Simple Moving Average (SMA) on the 4-hour chart. The subsequent pullback suggests that the recovery from the lowest level since July 2 might have run out of steam. However, the Relative Strength Index (RSI) around 55 and the Moving Average Convergence Divergence (MACD) turning positive hint at improving momentum. This warrants some caution before placing bearish bets on the GBP/USD pair.

That said, a clear break above the nearby SMA resistance at 1.3385 is still needed to unlock further upside. Spot prices might then climb to the 38.2% Fibonacci retracement of the June-July rally, at 1.3398, en route to the 23.6% retracement at 1.3459. On the downside, initial support aligns at the 61.8% Fibo. retracement at 1.3299, with a deeper floor at the 78.6% level near 1.3229. A sustained break below the latter would weaken the current constructive bias and expose the June swing low, around 1.3140.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

GBP/USD 4-hour chart