GBP/USD Price Analysis: The 55 SMA and a key Fib level are close by to provide support

• GBP/USD is trading 0.25% higher on Wednesday after some recent weakness.
• The 55 Simple Moving Average seems to have worked well as a support zone.

GBP/USD daily chart

Looking at the recent GBP price action it seems the price has pulled away from the oversold area. This is a mean reversion type move for now but GBP/USD will be a competition over USD weakness vs Brexit headlines over the coming sessions. The dollar index is trading 0.30% lower at the moment and that is the same as GBP/USD at the time of writing. So it might not be that GBP is improving but more that the USD strength was slightly overdone and there has been a retracement.

Looking at the chart, the price stopped dead on the 55 Simple Moving Average. In addition to this, the price is currently hovering above the 23.6% Fibonacci retracement and if the daily candle close is near to where the price is today it could be a bullish sign. Lastly, the price is also very close to the 1.30 psychological area and a close above this could have some implications too. 

The indicators have a bearish tilt still but there is a bullish signal. The Relative Strength Index has a bullish failure swing. This is when the indicator makes a lower low wave and the price makes a higher low. This divergence shows that this could be a pullback from the underlying uptrend. The MACD is also pretty mixed as the histogram is red but the signal lines are above zero. 

Overall, there could be more bullishness to come but this can be changed by a random Brexit headline at any stage. The technical pattern is bullish and this recent retracement just looks like the next higher low. 

Additional levels