GBP/USD: Nears 50DMA support, signs of bullish divergence on 1H chart

• Dismal UK Q4 GDP print weighed over the GBP/USD pair on Thursday.
• Bullish price-RSI divergence on 1H chart signals pullback could be over.

The GBP/USD pair fell for the third straight day yesterday as the dismal UK Q4 GDP release weighed over the British Pound.

The economy expanded by 1.8 percent between 2016 and 2017, slightly less than the 1.9 percent seen between 2015 and 2016, meaning the UK was the slowest-growing major economy in the world and that seems to have hurt the Pound.  

As of writing, the currency pair is trading at 1.4025, having clocked a session low of 1.4012 earlier today. Further, the pair also looks set to test the ascending 50-day moving average (MA) located at 1.3992.

That said, the decline will likely be short-lived as indicated by the bullish price-relative strength index (RSI) divergence seen on the 1-hour chart. Also, it is worth noting that unwinding of the USD shorts ahead of the quarter end played a big role in the GBP/USD's three-day losing streak. So, the losses could be reversed next week, unless the focus shifts to the widening interest rate differential.  

GBP/USD Technical Levels

The 10-day MA is still biased bullish (sloping upwards). So a move above 1.4090 (10-day MA) would put the bulls back into the driver's seat and could yield a rally to 1.4245 (March 26 high). A close higher would allow re-test of the yearly high of 1.4346.

On the downside, acceptance below the 50-day MA of 1.3992 would see the daily RSI roll over into the bearish territory, signaling the potential for a decline to 1.3890 (March 16 low) and 1.3781 (March 8 low).