GBP/USD Analysis: 1.2665-70 has emerged as a strong barrier ahead of 200-DMA

• GBP/USD once again failed near the 1.2665-70 supply zone, ahead of 200-day SMA.
• A modest USD rebound from lows exerted some pressure amid Brexit uncertainties.
• Investors now look forward to the BoE Governor Bailey’s speech for some impetus.

The GBP/USD pair struggled to capitalize on its intraday uptick and for the third straight session on Monday, witnessed a modest pullback from the 1.2665-70 supply zone. The pair drifted into the negative territory and refreshed daily lows during the early European session. The intraday price action was exclusively sponsored by a modest US dollar rebound from lows, though the pair lacked any firm directional bias and remained well within the previous session's trading range.

The USD remained on the defensive through the first half of the trading action on Monday and was pressured by firming expectations that the worst of the coronavirus pandemic was probably over. Moreover, the incoming positive economic data has been fueling hopes of a sharp V-shaped global economic recovery. The optimism was evident from a positive tone across the global equity markets, which undermined the greenback's safe-haven status and provided an early lift to the pair.

However, concerns about the ever-increasing COVID-19 cases and deteriorating US-China tensions helped limit any deeper USD losses, which, in turn, capped any strong gains for the pair. It is worth reporting that the US President Donald Trump on Friday announced that there will be no phase-two trade deal with China in the near future. Meanwhile, China's Foreign Minister was out with some comments on Monday and threatened to impose sanctions on US lawmakers.

This comes amid persistent Brexit-related uncertainties, which further took its toll on the British pound and exerted some pressure on the major. Hence, the key focus will be on the post-Brexit trade negotiations, which head to Brussels this week. In the meantime, a scheduled speech by the BoE Governor Andrew Bailey – due later during the US session – will be looked upon for some short-term trading impetus. Apart from this, the broader risk sentiment might continue to influence the USD price dynamics and further produce some short-term opportunities amid absent relevant economic releases, either from the UK or the US.

Short-term technical outlook

From a technical perspective, bulls are likely to wait for a sustained move beyond the 1.2665-70 region before positioning for any further appreciating move. The pair might then aim to challenge the very important 200-day SMA, around the 1.2700 mark, which coincides with the 61.8% Fibonacci level of the 1.3515-1.1412 downfall. A convincing breakthrough the mentioned confluence hurdle will be seen as a fresh trigger for bullish traders and pave the way for an extension of the recent positive momentum.

On the flip side, any subsequent pullback is likely to find some support near the previous day’s swing low, around the 1.2565 area. Failure to defend the mentioned support might turn the pair vulnerable to accelerate the fall back towards the key 1.2500 psychological mark. Some follow-through selling could accelerate the slide further towards the next major support near mid-1.2400s.