Technical outlook:

GBPUSD dropped to fresh swing lows at around 1.1900 on Tuesday, just 30-35 pips below the previous low. This could be a test of potential support at around 1.1900 before prices reverse higher again. The currency pair is carving shallow lows followed by sharp pullback rallies from 1.2150, which indicates that a potential bottom is close.

GBPUSD has carved a larger-degree corrective wave since January 2021 highs registered at 1.4250. Unlike the euro, which has slipped to fresh swing lows, the sterling has dropped just below the Fibonacci 0.618 retracement of the previous larger-degree upswing (1.1400- 1.4250). A bullish reversal from current levels (1.1930) remains highly probable.

GBPUSD is now facing immediate price resistance at around the 1.2300-2400 zone as marked on the daily chart here. Bulls are required to now break above 1.2400 to confirm a potential trend reversal and to assert they are back into control. Until that happens, prices will remain vulnerable to fresh swing lows.

Going forward:

GBPUSD has been carving recent lows at around 1.2150, 1.2106, and 1.1900-30 in the past few trading sessions. Importantly, each low was accompanied by a bullish divergence on the daily RSI as seen on the chart here. This could be a sign of a potential bullish reversal in the near term.

Trading plan:

Preparing for a potential bullish reversal soon.

Good luck!