GBP/USD Analysis: Continues to find some support ahead of 1.2500 mark

The GBP/USD pair witnessed some selling through the first half of the trading action on Friday, albeit lacked any strong follow-through. The downtick was solely led by some cross-driven weakness stemming from a strong bid tone surrounding the EUR/GBP amid the optimism over a deal on the EU's proposed €750 billion coronavirus recovery fund. However, the emergence of some fresh selling around the US dollar extended some support and helped limit any deeper losses for the major.

The second wave of the coronavirus infections in the US fueled concerns that the economic recovery will take much longer than initially expected. This, in turn, undermined demand for the greenback, which was further pressured by the disappointing release of the Michigan Consumer Sentiment Index. The gauge snapped two months of an uptrend and fell to 73.2 in July from 78.1 in previous. The respondents' view of economic conditions sank to 84.2 from 87.1.

The pair once again managed to find decent support ahead of the key 1.2500 psychological mark and rallied over 60 pips from daily lows, ending the day with modest gains. Meanwhile, a slight deterioration in the global risk sentiment extended some support to the USD's relative safe-haven status and exerted some pressure on the major. In the absence of any major market-moving economic releases, either from the UK or the US the USD price dynamics might continue to act as an exclusive driver of the pair's momentum on the first day of a new trading week.

Short-term technical outlook

From a technical perspective, nothing seems to have changed much for the pair and the 1.2500 mark might continue to act as immediate support. Any subsequent weakness below weekly lows, around the 1.2480 region, now seems to accelerate the fall further towards 100-day SMA support, currently near the 1.2425 region.

On the flip side, the 1.2600 mark now seems to act as an immediate resistance, above which bulls are likely to make a fresh attempt towards testing the 1.2665-75 strong horizontal resistance. A sustained move beyond should set the stage for a further near-term appreciating move towards reclaiming the 1.2700 mark en-route June daily closing highs resistance near the 1.2745 zone.