GBP/USD trimmed early losses, accelerating its slump early US session, and trading in the 1.3220 region. Market players keeping an eye on the US 10-year Treasury note yield, and a possible break above 1.50%.
From a technical perspective, the emergence of fresh selling at higher levels validates last week's bearish break through a short-term descending channel extending from July. This, in turn, supports prospects for an extension of the recent downward trajectory from the 1.3830-35 region touched in October. Hence, a subsequent slide back towards testing sub-1.3200 levels, or the YTD low set last week, remains a distinct possibility. Some follow-through selling should pave the way for a fall towards the next relevant support near the 1.3125 region en-route the 1.3100 mark and the 1.3050-45 region.
On the flip side, the 1.3290-1.3300 region might continue to act as immediate strong resistance. A sustained strength beyond could prompt some short-covering move and accelerate the recovery towards the 1.3340-50 supply zone. This is followed by resistance near the 1.3370 area and the 1.3400 level. The latter should act as a key barrier, which if cleared decisively will suggest that the pair has formed a near-term base and negate the bearish outlook
