GBP/USD flirting with 50-DMA support

The GBP/USD pair came under some renewed selling pressure on Tuesday and extended its downslide for the fourth straight session.

The pair dropped to test 50-day SMA support near 1.2415-10 region, its lowest level in over a week before bouncing off lows to currently trade around 1.2425-30 region. Spot ran through fresh offers and accelerated its reversal move from session peak level of 1.2520 following disappointing credit data from the UK.

Data released on Tuesday showed Net Lending to Individuals slowed to £4.8 billion in December, while Mortgage Approvals rose less-than-expected by 67.9K during the same period. Today's disappointing data, pointing to slowing credit off-take, could be the first signs of a possible slowdown in the economy amid lingering Brexit worries.

Meanwhile, a modest greenback recovery from lows, with the key US Dollar Index paring early losses to turn neutral, could have also collaborated to the pair’s downslide.

Next in focus would be the US economic data that includes Chicago PMI and Conference Board’s Consumer Confidence Index, which might provide some fresh impetus during NA session.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet notes, "according to technical readings in the 4 hours chart favor a bearish extension, given that the price is well below a now clearly bearish 20 SMA, whilst indicators head south within negative territory. Some short term consolidation could be expected now, although a break below the mentioned Fibonacci support should lead to a continued decline towards the 1.2330 region, a strong static support level, and the 50% retracement of the same rally."

She further writes, "The immediate resistance comes at 1.2460, with a recovery above it favoring an extension up to 1.2520."

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