- GBP/USD witnessed selling for the third successive day and dropped to over a two-week low.
- A sustained break below the 1.3535-1.3530 confluence was seen as a fresh trigger for bears.
- The stage now seems all set for a slide towards testing the 50% Fibo., around mid-1.3400s.
The GBP/USD pair added to its intraday losses and dropped to a two-and-half-week low, below the 1.3500 psychological mark during the mid-European session.
The UK political crisis, along with disappointing UK PMI prints undermined the British pound. Apart from this, a strong pickup in the US dollar demand turned out to be a key factor that dragged the GBP/USD pair lower for the third successive day.
From a technical perspective, a sustained break below the 1.3535-1.3530 confluence was seen as a fresh trigger for bearish traders. The mentioned region comprised of the 100-day SMA and the 38.2% Fibonacci retracement level of 1.3161-1.3749 strong move up.
Meanwhile, oscillators on the daily chart have just started drifting into the negative territory and support prospects for further losses. Hence, some follow-through slide towards the 50% Fibo. level, around the 1.3455 region, remains a distinct possibility.
On the flip side, any attempted recovery might now meet with a fresh supply near the 1.3530-1.3535 confluence support breakpoint. This, in turn, should cap the upside for the GBP/USD pair near the 1.3580-1.3585 region, which should now act as a pivotal point.
The latter is closely followed by the 1.3600 mark and the 23.6% Fibo. level, which if cleared decisively will negate the bearish bias. The GBP/USD pair might then accelerate the momentum towards the 1.3660 resistance en-route the 1.3700 round-figure mark.
GBP/USD daily chart
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Levels to watch
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