GBP/USD Forecast: 1.3460 becomes the next line of defence

GBP/USD has lost more than 100 pips on Monday and touched its weakest level in three weeks at 1.3439. Although the pair seems to have gone into a consolidation mode early Tuesday, it remains below 1.3500 and shows no convincing signs of a convincing rebound.

The intense flight to safety caused the British pound to continue to lose interest on Monday. The UK's FTSE 100 Index is up nearly 1% on Tuesday but this move doesn't yet confirm a positive shift in risk sentiment.

The ongoing conflict between Russia and Ukraine, signs of a slowdown in global economic activity and political jitters in the UK are likely to force investors to stay away from the GBP. Additionally, US stock index futures are down between 0.3% and 1%, suggesting that safe-haven flows are likely to take control of markets in the second half of the day.

Meanwhile, as an official report on Downing Street parties during lockdowns is awaited, British Prime Prime Minister Boris Johnson's office admitted on Monday that there was another gathering to celebrate Johnson's birthday in June 2020.

Later in the day, the Conference Board will release the US Consumer Confidence Index for January. Unless this report comes in much stronger than expected, the market mood is likely to remain sour, favouring the greenback over its risk-sensitive rivals. 

GBP/USD Technical Analysis

The 200-period SMA on the four-hour chart forms dynamic support at 1.3460 and the pair could come under renewed bearish pressure in case this level turns into resistance. On the downside, 1.3410 (Fibonacci 61.8% retracement of the latest uptrend) aligns as the next bearish target.

First resistance is located at 1.3500 (psychological level) before  1.3530 (Fibonacci 38.2% retracement). Unless the pair manages to make a daily close above the latter, the near-term outlook is likely to remain bearish.