The next downside target is seen at 1.2540

The GBP/USD pair recovers some lost ground and currently trades around 1.2580 on Wednesday during the early European session. The decline of the USD Index (DXY) and the dismal market mood in the UK economy act as a tailwind for the major pair. Later on Wednesday, the ADP Employment Change and the ISM Services PMI will be due. Also, Federal Reserve (Fed) Chair Jerome Powell’s speech will be a closely watched event. 

Technically, the bearish outlook of GBP/USD remains intact as the major pair is below the key 50-period and 100-period Exponential Moving Average (EMA) on the four-hour chart with a downward slope. Furthermore, the downward momentum is confirmed by the Relative Strength Index (RSI), which hovers around 44.5 in bearish territory, supporting the sellers for the time being. 

The immediate resistance level for GBP/USD will emerge near the 50-period EMA at 1.2617. The next hurdle is seen near the 1.2650–1.2660 region, portraying the 100-period EMA and the upper boundary of the Bollinger Band. A break above the latter will pave the way to the 1.2700 psychological level. Further north, the next upside target is located at a high of March 18 at 1.2746. 

On the downside, a low of April 1 at 1.2540 acts as an initial support level for the major pair. The additional downside filter to watch is a low of April 1 at 1.2540. A breach of the lower limit of the Bollinger Band at 1.2525 will expose a low of December 8 and the round mark of 1.2500. 

GBP/USD four-hour chart