GBP/USD could extend the decline on failure to defend 1.2420 – SocGen

GBP/USD idles around 1.25. Economists at Société Générale analyze the pair’s technical outlook.

Signs of a meaningful up-move are not yet visible

GBP/USD gave a break below the neckline of a Head and Shoulders resulting in a steady decline.

GBP/USD is now close to interim support of 1.2420 representing the 200-DMA. This test could result in a bounce however signals of a meaningful up-move are not yet visible. 

Right shoulder level near 1.2745/1.2820 could remain an important resistance zone near term. 

If the pair fails to hold above the Moving Average near 1.2420, the phase of downtrend is expected to extend. Next objectives are located at May low of 1.2300 and target of the formation near 1.2170/1.2100.