- GBP/USD has been struggling to move back above the 1.3875-80 support breakpoint.
- The set-up favours bearish traders and supports prospects for additional weakness.
The GBP/USD pair failed to capitalize on Friday's goodish rebound from sub-1.3800 levels, or two-and-half-week lows and the upside remained capped near the 1.3875-80 supply zone. This marks a descending triangle support breakpoint.
Apart from this, repeated pullbacks from the vicinity of the 1.4000 psychological mark formed a bearish double-top on the daily chart. The combination of bearish patterns supports prospects for an extension of the recent downward trajectory.
However, the declining trend of new COVID-19 cases in the UK, along with the end of pandemic-related restrictions and the BoE's hints about modest tightening acted as a tailwind for the sterling and helped limit the downside for the GBP/USD pair.
There isn't any major market-moving economic data due for release from the US on Monday. This further makes it prudent to wait for some strong follow-through selling before confirming the bearish outlook and positioning for any further appreciating move.
From current levels, any move beyond the mentioned horizontal support breakpoint might be seen as a selling opportunity near the 1.3900 mark. This should cap any meaningful upside for the GBP/USD pair near the 100-day SMA, around the 1.3910-15 area.
On the flip side, some follow-through selling below the daily swing lows, around the 1.3840-35 region might find some support near the 1.3800-1.3790 region. Some follow-through selling might then drag the GBP/USD pair towards the 1.3730-25 support zone.
GBP/USD 4-hour chart
Technical levels to watch
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