GBP/USD is a loaded pair of fundamentals, technically ripe for the bears

• GBP/USD failing at technical resistance structure bears seek out a trip back to 1.2520.
• Fundamentals are capping the pound's advance with Brexit uncertainty a thorn in the side. 

GBP/USD is currently trading at 1.2613, close to Friday's close and within a range of between 1.2591 and 1.2666.

The pound has struggled to break up beyond a triple-top and could be a due a correction towards 1.2520 to snap a good run over the past 5 days where had been the best performing G10 currency.

Investors have been encouraged by an improvement in the coronavirus statistics for the UK as well as the easing of the lockdown. 

The cream on the top came in a fresh GBP 30 bln fiscal stimuli from the UK's Chancellor, Rishi Sunak.

Net short GBP positions also dropped back last week. However, positive sentiment surrounding the UK economy and the pound even lasts too long these days.

Bulls will be reluctant to leave to much skin in the game on a spot basis at the first signs of pessimism on the charts. 

The stark risks to the UK economy and the pound can't be ignored. 

Brexit remains a thorn in the side and considering the high mortality rate from COVID-19, social behaviours may mean the UK's services industry will be at risk to a prolonged void of activity and subsequent labour market vulnerabilities.

Bank of England (BoE) Governor Andrew Bailey noted on Monday that they are seeing signs of recovery in the economy.

Bailey further added that they still have a long way to go and reiterated that they are worried about jobs.

Tomorrow's release of May monthly Gross Domestic Produce, as well as Industrial Production data, will draw special attention to the pound these commencing sessions for the week. 

Meanwhile, analysts at Rabobank explained that according to the OECD "the UK will suffer one of the worst COVID-19 related downturns in the G10 due the pressure its large services sector and as a consequence of the long lockdown."

The uncertainty about the outlook for the UK recovery is threatened further by doubts regarding a post Brexit trade deal between the UK and the EU.

After last week’s round of trade talks, EU negotiator Barnier reported that “significant divergences” remains between the two sides.

Prospects of negative rates 

Investors are well versed by now over the prospects of negative rates in the UK.

Earlier this month, the Bank of England issued a warning on challenges of negative interest rates which make spending more attractive than saving thus stimulating economic activity.

According to a report in The Sunday Times, the letter sent to lenders said negative rates are "one of the potential tools under active review" by the central bank due to the economic fallout of the coronavirus.

Rates are already at a record low, having been cut to 0.1% in response to the economic fallout from the coronavirus.

However, as the analysts at Rabobank explained, "Brexit related uncertainties on top of the shock of the COVID-19 lockdowns has meant that the market is reluctant to dismiss the possibility that the BoE could at some point be forced into using negative interest rates."

Insofar as the UK has a current account deficit, in contrast to the other countries that have used a negative rate, it is possible that GBP could be particularly vulnerable in this scenario. 

GBP/USD levels

From a daily perspective, the bulls have failed a series of attempts below 1.2700 and the  200-day moving average, at an eight-month resistance area.

The price has slumped back to below the 1.26 level.

To the downside, the 24th and 25th June highs are compelling as a support structure where a confluence of the 3rd July lows and prior impulse's 61.8% marries-up.

Analysts at Commerzbank have argued that immediate upside pressure will be maintained while the currency pair remains above the 1.2543 June 24 high.