- A combination of factors dragged GBP/USD lower for the second successive session.
- Worries that job losses will rise after the furlough scheme ends weighed on GBP.
- The risk-on impulse benefitted the safe-haven USD and contributed to the selling bias.
- The USD bulls seemed rather unaffected by the disappointing US Retail Sales figures.
The GBP/USD pair extended the previous day's pullback from the 1.3875-80 resistance zone and witnessed some selling for the second consecutive day. The downward momentum dragged the pair to three-week lows around the 1.3785 region during the first half of the European session.
Looking at the technical picture, the recent pullback from the vicinity of the 1.4000 psychological mark constituted the formation of a bearish double-top on the daily chart. This, along with the overnight rejection near a descending triangle support breakpoint, supports prospects for a further near-term depreciating move.
Meanwhile, technical indicators on the daily chart have just started drifting into the bearish territory and add credence to the near-term negative outlook for the GBP/USD pair. Hence, some follow-through weakness towards the 1.3730-25 intermediate support zone, en-route the 1.3700 mark, remains a distinct possibility.
Some follow-through selling below the 1.3675 horizontal level will turn the GBP/USD pair vulnerable to accelerate the downfall towards the 1.3625 region. This is closely followed by the 1.3600 mark and multi-month lows around the 1.3570 region touched on July 20, which if broken will be seen as a fresh trigger for bearish traders.
On the flip side, any meaningful recovery attempt beyond the 1.3800 mark might confront stiff resistance and meet some fresh supply near the 1.3840-50 region. This, in turn, should continue to cap the GBP/USD pair near the 1.3875-80 strong barrier, which if cleared might negate the near-term negative bias.
