During the prior weeks, the GBP/USD traded in channel down and channel up patterns that represented the rate’s larger scale sideways trading between the 1.3800 and 1.4000 mark.
Most recently, the rate was in a channel down pattern that had guided the rate to a support zone near 1.3820. The zone provided enough support for the pair to break the upper trend line of the channel pattern. However, as the 55-hour simple moving average approached from above, a decline started in the aftermath of the breaking of the pattern.
By the middle of Tuesday’s European trading hours, the GBP/USD had dropped and passed the support of the 1.3800 level and found support in the March 12 low level at 1.3775.
If the 1.3775 support would hold, the rate should find resistance in the weekly S1 simple pivot point at 1.3787. If the pivot point does not provide resistance, the pair could retrace back up to the 1.3820 level.
On the other hand, a decline below the 1.3775 level would most likely result in a decline to the 1.3700 mark, as there is no technical support as low as that level. At that level both the weekly S2 could provide support and the round exchange rate level should provide psychological support.