GBP/USD Analysis: Bulls struggle to find acceptance above 1.3100 mark

• Sustained USD selling assisted GBP/USD to gain some strong positive traction on Thursday.
• Upbeat US employment data, surging US bond yields provided some respite to the USD bulls.
• The US fiscal impasse kept a lid on the attempted USD rebound and extended some support.

The GBP/USD pair gained some strong positive traction on Thursday and recovered further from the key 1.3000 psychological mark, or over one-week lows set in the previous session. The positive move was exclusively sponsored by the prevalent offered tone surrounding the US dollar, which remained depressed in the wake of the impasse over the next round of the US fiscal stimulus. The pair surged past the 1.3100 round-figure mark, albeit struggled to capitalize on the move and ran out of the steam just ahead of the weekly tops.

Data released from the US showed that initial weekly jobless claims dropped below one million for the first time since the start of the pandemic, offering signs of the US economic recovery. This coupled with an intraday spike in the US Treasury bond yields provided some respite to the USD. Adding to this, a cautious mood around the US equity markets drove some haven flows towards the greenback and prompted some selling at higher levels.

The pair finally settled around 60 pips off daily tops but managed to regain some positive traction during the Asian session on Friday. The suspension of talks for COVID-19 stimulus measures in the US and the fact that the Senate will not return this month unless negotiators strike an agreement held investors from placing any aggressive USD bullish bets. This, in turn, was seen as a key factor that assisted the pair to edge higher for the second consecutive session.

Moving ahead, market participants now look forward to a duo of important US macro data for some impetus. Friday's US economic docket highlights the release of monthly Retail Sales and Michigan Consumer Sentiment Index for August, which might influence the USD price dynamics and produce some meaningful trading opportunities on the last day of the week.

Short-term technical outlook

From a technical perspective, the overnight positive move pushed the pair beyond a one-week-old descending trend-line resistance. However, the lack of any strong follow-through buying warrants some caution before placing fresh bullish bets. That said, a sustained strength back above the 1.3100 mark will shift the near-term bias back in favour of bulls and lift the pair further beyond the 1.3125 region, or weekly tops. Bulls might then aim to test monthly swing highs, around the 1.3185 region. Some follow-through buying beyond the 1.3200 level will set the stage for a move towards reclaiming the 1.3300 round-figure mark.

On the flip side, any subsequent pullback might continue to attract some dip-buying and remain limited near the 1.3000 mark. This is closely followed by support near the 1.2980 region, which if broken decisively will negate the bullish outlook and prompt some aggressive technical selling. This might turn the pair vulnerable to accelerate the fall towards the 1.2900 mark before en-route the next major support near the 1.2815-10 region. The latter marks the previous swing high resistance breakpoint and should act as a key pivotal point for short-term traders.