GBP/USD Analysis: Struggles to register any meaningful recovery, bearish bias remains

The GBP/USD pair gained some traction on Friday and climbed to three-day tops, around the 1.2805 region during the early European session. The British pound stabilized a bit after the UK Chancellor Rishi Sunak announced the new Job Support Scheme, which will replace the furlough scheme and cover two-thirds of the lost wages. Sunak said that it was part of a wider winter economy plan and aimed to support workers hit by a resurgent COVID-19 pandemic.

Apart from this, a modest recovery in the global risk sentiment undermined the US dollar's safe-haven status and remained supportive of the uptick for the second straight day. Reports indicated that Democrats in the US House of Representatives are working on a $2.2 trillion coronavirus stimulus package. Renewed hopes of additional US fiscal stimulus measures boosted investors' confidence and led to a modest recovery in the equity markets.

The uptick pushed the pair further beyond two-month tops touched on Wednesday, albeit lacked any strong follow-through. Investors remain concerned that the second wave of coronavirus infections could lead to severe lockdown restrictions. This, along with the likelihood of the global economic slowdown, extended some support to the greenback's safe-haven status and capped the upside for the GBP/USD pair amid increasing odds of a no-deal Brexit.

Investors also seemed reluctant, instead preferred to wait for fresh Brexit updates before placing any aggressive directional bets. There isn't any major market-moving economic data due for release from the UK and hence, the USD price dynamics might continue to act as a key driver of the pair's momentum. Meanwhile, the US economic docket highlights the release of Durable Goods Orders. Apart from this, the broader market risk sentiment will influence the USD demand and produce some meaningful trading opportunities on the last day of the week.

Short-term technical outlook

From a technical perspective, the lack of any strong follow-through buying suggests that the near-term selling pressure might still be far from being over. That said, it will be prudent to wait for a bearish acceptance below the very important 200-day SMA before positioning for any further depreciating move. A convincing break through the 38.2% Fibonacci level of the 1.1412-1.3482 positive move, around the 1.2685-75 region, will reaffirm the negative bias and turn the pair vulnerable to accelerate the fall to the 1.2625-20 horizontal support en-route the 1.2600 mark. The downward trajectory could further get extended further towards mid-1.2500s before the pair eventually drops to the key 1.2500 psychological mark.

On the flip side, sustained strength beyond the 1.2800 round-figure mark might trigger some short-covering move. The pair might then aim to surpass the 1.2855-60 intermediate hurdle and climb further towards reclaiming the 1.2900 mark. Some follow-through buying will negate any near-term bearish bias and pave the way for a move towards the key 1.3000 psychological mark.