GBP/USD Price Analysis: Extends the pullback from weekly tops, further below mid-1.3700s
- GBP/USD witnessed some selling on Friday and eroded a part of the overnight strong gains.
- This week’s strong recovery from sub-1.3600 levels stalled near the 200-hour SMA resistance.
- Sustained move beyond the mentioned barrier is needed to support prospects for further gains.
The GBP/USD pair extended its steady intraday descent through the first half of the European session and dropped to fresh daily lows, around the 1.3725 region in the last hour.
Rising COVID-19 infections in the UK, along with the impasse over the Northern Ireland Protocol of the Brexit deal acted as a headwind for the British pound. The intraday selling picked up pace following the disappointing release of UK PMI prints for July and forced the GBP/USD pair to erode a part of the overnight gains to weekly tops.
From a technical perspective, the GBP/USD pair struggled to capitalize on this week’s solid rebound from sub-1.3600 levels, or the lowest level since February and faced rejection near 200-hour SMA. The mentioned barrier is currently pegged near the 1.3760 region and is followed by the overnight swing highs, around the 1.3775-80 area.
A sustained move beyond will be seen as a fresh trigger for bullish traders and set the stage for additional gains. The GBP/USD pair might then surpass the 1.3800 round figure and accelerate the momentum towards the 1.3840-50 intermediate resistance. The momentum could further get extended and allow bulls to reclaim the 1.3900 mark.
On the flip side, the 1.3700 mark is likely to protect the immediate downside ahead of the 1.3670-65 horizontal zone. A convincing break below has the potential to drag the GBP/USD pair back towards the 1.3600 mark en-route monthly lows, around the 1.3570 region. Some follow-through selling will expose the key 1.3500 psychological mark.
GBP/USD 1-hour chart
