GBP/USD – Correction on the cards?

Or can it fall further?

The pound has been trending lower over the last month or so but the decline may finally be losing momentum.

It’s found some support around 1.32 but momentum has been slipping over the last week or two, creating divergences on both the daily and 4-hour chart, which may suggest a correction is coming.

If the pair has bottomed for now, how deep a correction can we expect? The first test is 1.3360-1.3375 where recent resistance combines with past support and the 55/89-period SMA band on the 4-hour chart.

Above here, 1.34 is interesting but 1.35-1.3520 is the next big test. Here, recent resistance combines with the 50 fib level and the 200/233-period SMA on the 4-hour chart.

Finally, 1.36 sees the 61.8 fib and the top of the 55/89-day SMA band. A move above here would suggest a much deeper correction is on the cards after six months of decline.

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