Anna 
The GBP/USD pair struggled to capitalize on its overnight bounce from the 1.2300 mark, hovering in a narrow range during the Asian session on Tuesday. Currently trading around the mid-1.2300s, the pair remains relatively unchanged for the day, largely influenced by US Dollar (USD) dynamics.
The receding fears of a wider conflict in the Middle East have supported a positive risk sentiment, weakening the safe-haven appeal of the USD and providing some support to the GBP/USD pair. However, expectations that the Federal Reserve (Fed) will maintain higher interest rates for a longer period due to persistent inflationary pressures continue to bolster the Greenback. Additionally, speculations regarding more aggressive policy easing by the Bank of England (BoE) have contributed to limiting the pair’s upside potential.
Technically, the recent breakdown below the 1.2400 support level and descending trend-channel support near 1.2400 signaled bearish momentum. Despite oversold conditions indicated by the Relative Strength Index (RSI) on the daily chart, traders are cautious and may await consolidation or a modest recovery before considering further downside moves. Nevertheless, the pair remains vulnerable to extending its downtrend from the year-to-date peak reached in March.
In terms of potential price movements, a meaningful recovery may face resistance near the 1.2400 level, followed by the 1.2465-1.2470 region. Further upside momentum could be capped near the psychological level of 1.2500. Conversely, the overnight swing low around 1.2300 serves as immediate support, with further downside potentially targeting the 1.2245 and 1.2200 levels, followed by the 1.2135 zone.
Traders will closely monitor developments in US Dollar dynamics, global risk sentiment, and central bank policy outlooks for further guidance on the GBP/USD pair’s direction.
