GBP/USD Forecast: Break below ascending trend-line to confirm a bearish double-top

• GBP/USD faced rejection near the 1.3700 mark on Friday amid a broad-based USD strength.
• Concerns about the ever-increasing COVID-19 cases underpinned the safe-haven greenback.

The GBP/USD pair continued with its struggle to find acceptance, or build on the recent bullish momentum beyond the 1.3700 mark and witnessed some long-unwinding trade on Friday. The pair did get a minor lift following the release of monthly UK GDP print, which showed that the economy contracted by 2.6% MoM in November as against -5.7% anticipated. The reading, to a larger extent, was offset by the disappointing releases of Industrial Production and Goods Trade Balance data.

This, along with a broad-based US dollar strength, exerted some heavy pressure on the major. Investors remain concerns about the continuous surge in the number of new COVID-19 cases worldwide. Friday's disappointing US macro data added to market worries about the potential economic fallout from the coronavirus pandemic and weighed on investors' sentiment. This was evident from a weaker tone around the equity markets, which, in turn, drove some haven flows towards the USD and contributed to the pair's slide.

The pair finally settled below the 1.3600 mark – erasing a major part of its weekly gains – and remained depressed through the Asian session on Monday. Better-than-expected Chinese GDP report, showing that the world's second-largest economy grew 6.5% during the October-December period, did little to boost investors' confidence. This was evident from the prevalent cautious mood, which continued benefitting the safe-haven greenback.

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 driving the broader market risk sentiment. This, in turn, would influence the USD price dynamics and produce some meaningful trading opportunities around the major.

Short-term technical outlook

From a technical perspective, repeated failures near the 1.3700 mark seemed to constitute the formation of a bearish double-top pattern on short-term charts. That said, investors might still wait for a sustained break below a near one-month-old ascending trend-line support before positioning for any further depreciating move. A convincing breakthrough the mentioned support, currently near the 1.3545 region, now seems to accelerate the fall towards the key 1.3500 psychological mark before the pair eventually drops to the next major support near the 1.3455-45 horizontal support.

On the flip side, the 1.3600 mark – coinciding with 200-hour SMA – now seems to act as immediate strong resistance. This is closely followed by the 1.3625 region, which if cleared decisively might negate any near-term bearish bias. The subsequent positive move has the potential to push the pair back towards challenging the double-top resistance, around the 1.3700-1.3710 heavy supply zone.