GBP/USD slides to multi-day lows, further below mid-1.3500s
|- GBP/USD witnessed some follow-through selling for the second consecutive session on Monday.
- COVID-19 jitters benefitted the USD’s safe-haven status and exerted some pressure on the pair.
- A sustained break below an ascending trend-line would pave the way for additional weakness.
The GBP/USD pair lost some additional ground during the early European session and dropped to fresh multi-day lows, around the 1.3535 region in the last hour.
The pair extended previous session's retracement slide from the 1.3700 mark, or multi-year tops and witnessed some follow-through selling on the first day of a new trading week. The prevalent cautious mood benefitted the US dollar's relative safe-haven status and was seen as a key factor dragging the GBP/USD pair lower for the second consecutive session.
Investors remain concerned about the potential economic fallout from the continuous surge in the number of new COVID-19 cases. The worries were further fueled by Friday's disappointing US monthly Retail Sales figures for December, which, to a larger extent, offset better-than-anticipated Chinese GDP growth figures for the fourth quarter of 2020.
Meanwhile, the British pound was further pressured by the imposition of fresh restrictions in the UK and failed to gain any respite from the optimism over the rollout of COVID-19 vaccines. In fact, the UK vaccine deployment minister, Nadhim Zahawi said that everyone will be offered a vaccine by September, albeit did little to impress the GBP bulls.
Looking at the technical picture, repeated failures near the 1.3700 mark constituted the formation of a multiple-top pattern and could be seen as the first sign of bullish exhaustion. The subsequent pullback has now dragged the GBP/USD pair to a near one-month-old ascending trend-line support, which if broken decisively will set the stage for additional weakness.
There isn't any major market-moving economic data due for release on Monday, either from the UK or the US. Hence, developments surrounding the coronavirus saga will play a key role in influencing the broader market risk sentiment and the USD price dynamics. This should provide some impetus to the GBP/USD pair and produce some short-term trading opportunities.
Technical levels to watch
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