- GBP/USD extended last week’s rejection slide from the very important 200-day SMA.
- The risk-off mood revived the USD demand and exerted some follow-through pressure.
- Weakness below the 1.2400 mark now seems to pave the way for further intraday slide.
The GBP/USD pair remained depressed through the early part of European trading action and was last seen hovering near the lower end of its daily range, around the 1.2415 region.
The pair extended last week’s rejection slide from the vicinity of mid-1.2600s – marking the very important 200-day SMA hurdle – and witnessed some follow-through selling for the second straight session on Monday.
A US-China spat over the origin of the coronavirus overshadowed the recent optimism about the re-opening of economies in some parts of the world. This, in turn, dented investors’ appetite for perceived riskier assets.
The anti-risk flow was evident from a weaker tone around the equity markets. This, in turn, boosted the US dollar’s relative safe-haven status against its British counterpart and kept exerting some pressure on the major.
This comes amid increasing prospects for an extended lockdown in the United Kingdom, which coupled with renewed concerns about hard-Brexit further took its toll on the sterling and contributed to the pair’s ongoing retracement slide.
From a technical perspective, the pair now seems to have slipped below 50-day SMA and a subsequent fall below the 1.2400 mark might now be seen as a fresh trigger for bearish traders, setting the stage for a further intraday weakness.
There isn’t any major market-moving economic data due for release, either from the UK or the US. Hence, the USD price dynamics would play a key role in influencing the pair’s momentum and produce some meaningful trading opportunities.
Technical levels to watch
Some follow-through selling below the 1.2400 mark might accelerate the slide further towards intermediate support near the 1.2355-50 region before the pair eventually drops to test the 1.2300 level. On the flip side, the 1.2500 mark now seems to act as an immediate resistance ahead of the 1.2520 supply zone. A convincing break through might assist the pair to make a fresh attempt towards reclaiming the 1.2600 round-figure mark and retest 200-day SMA near the 1.2640-45 region.
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