GBPUSD could be ready to resume its long-term selloff after this latest pullback. Price is closing in on a strong area of interest around the 1.3500 handle and a descending trend line on the daily chart.

This also happens to line up with the 100 SMA dynamic inflection point, which adds to its strength as resistance. A slightly larger correction could still test the 61.8% Fib at 1.3580 before dropping back to the swing low at 1.3160.

The 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside or that the selloff is more likely to resume than to reverse. RSI has a bit more room to climb before reaching the overbought zone, so the correction could keep going.

Stochastic has already reached the overbought area, indicating that buyers are exhausted and could let sellers take over soon.

There are no major reports due from the UK this week, so the pound could simply function as a counter currency. Meanwhile, the dollar has to contend with the FOMC minutes due midweek and the NFP release later in the week.

The December FOMC statement turned out to be a bit more hawkish than expected, so the minutes might reiterate the central bank’s upbeat outlook. Traders are looking for more clues on the timing of the first rate hike this year, and any indication that it could happen before June could drive the dollar higher.

On the other hand, signs of a divide among policymakers and concerns about the Omicron variant could be enough to weigh on the US currency since this would dampen tightening hopes.

The NFP is projected to post a stronger pace of hiring for December, which might also be bullish for the US dollar. A downside surprise, however, could dash hopes of the Fed hiking rates earlier than initially anticipated.