GBP/USD Forecast: Pound looks vulnerable as it tests key support
- GBP/USD has started the new week under bearish pressure.
- The pair could suffer additional losses in case 1.3530 turns into resistance.
- US Dollar Index stays in the positive territory early Monday.

GBP/USD has snapped a four-week winning streak and lost nearly 1% last week as the British pound continued to lose interest following Friday's disappointing retail sales data. The pair stays under bearish pressure in the early European session on Monday and closes in on the key 1.3530 support.
Although the greenback struggled to gather strength amid falling US Treasury bond yields, the risk-averse market environment weighed on the British pound ahead of the weekend.
Later in the session, IHS Markit will release the flash Manufacturing and Services PMI reports for the UK. Investors expect these reports to reveal an ongoing expansion in the private sector's business activity at a robust pace. In case the PMI figures fall short of market expectations, GBP/USD could extend its slide and vice versa.
Meanwhile, Sue Gray, the senior civil servant who has been investigating the "Partygate" scandal, is expected to publish her findings this week. The pound should find it difficult to stage a rebound with investors staying on the sidelines while waiting for that report, which could have serious implications for British Prime Minister Boris Johnson.
In the second half of the day, Markit PMI data will be featured in the US economic docket but market participants will pay close attention to Wall Street. S&P Futures are currently up 0.7% on the day and a decisive rebound after the opening bell could help GBP/USD pare some of last week's losses.
GBP/USD Technical Analysis
GBP/USD stays below the 100-period SMA on the four-hour chart. Confirming the near-term bearish bias, the Relative Strength Index (RSI) indicator on the same chart continues to move sideways near 40.
On the downside, 1.3530 (Fibonacci 38.2% retracement of the one-month-old uptrend) aligns as the first support. In case this level turns into resistance, the pair could target 1.3500 (psychological level) and 1.3460 (200-period SMA).
Strong resistance seems to have formed at 1.3600 (fibonacci 23.6% retracement, 100-period SMA). A daily close above that level could be taken as a bullish sign and open the door for a more decisive rebound toward 1.3640 (50-period SMA).
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Author

Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.


















