GBP/USD Price Forecast: Retreats below 1.3220 set for a pullback

• GBP/USD struggles to keep its uptrend above year-to-date (YTD) high of 1.3266.
• RSI shifting overbought opened the door for GBP/USD's retracement.
• The uptrend will resume once the pair reclaims 1.3266.
• Downside risks emerge if GBP/USD tumbles below 1.3200.

The Pound Sterling retreats from the multi-year highs it reached on Tuesday and registers losses of over 0.40% against the Greenback as traders brace for the release of US inflation data on Friday. The GBP/USD enjoyed a ride and hit a two-year peak at 1.3266 following Fed Chair Jerome Powell's speech, yet at the time of writing, the pair trades at 1.3220.

GBP/USD Price Forecast: Technical outlook

According to the GBP/USD daily chart, the uptrend will extend as long as the pair remains above the top trendline of an ascending channel that was broken on August 23. However, due to the 400-pip rally in August, the pair is set to consolidate as buying momentum begins to fade, as depicted by the Relative Strength Index (RSI).

The RSI turned overbought, meaning the pair could retreat before aiming for higher prices.

If GBP/USD clears the YTD high of 1.3266, that could pave the way for challenging the March 23, 2022 peak at 1.3298. Further gains are seen once that level is cleared, with the next key resistance being the 1.3400 figure before challenging the March 1, 2022, high at 1.3437.

Conversely, if GBP/USD tumbles below 1.3200, this could exacerbate a pullback toward the latest cycle high at 1.3044, hit on July 17. A breach of the latter will expose the 50-day moving average (DMA) at 1.2857.

GBP/USD Price Action - Daily Chart