The GBP/USD pair struggled to register any meaningful recovery and remained within striking distance of 13-month lows, set last Friday. A modest US Dollar retracement, triggered by rumoured news that American pastor Andrew Brunson will be released from house arrest by August 15, did provide a minor lift during the European trading session on Monday. The uptick, however, quickly fizzled out ahead of the 1.2800 handle after the US Embassy in Turkey denied the rumours.
Meanwhile, the USD profit-taking slide remained limited on the back of global safe-haven flows, triggered by the ongoing currency crisis in Turkey. Adding to this, resurgent US Treasury bond yields also underpinned the greenback, which coupled with Brexit uncertainties further collaborated towards keeping a lid on any meaningful up-move for the major.
The pair extended its consolidative price-action through the Asian session on Tuesday as market participants now look forward to UK employment details for some meaningful impetus. The key focus would be on the wage growth figures, with Average Earnings excluding bonuses expected to hold steady at 2.7%. Any positive surprise seems unlikely to ease the prevailing bearish sentiment surrounding the British Pound and hence, any data-led uptick might turn out to be short-lived amid growing prospects of a no-deal Brexit.
Looking at the technical picture, the recent range-bound price action constitutes towards a rectangular chart pattern formation on the daily chart, indicating a brief pause in the trend. The bearish continuation formation adds credence to last week’s breakdown below a short-term descending trend-channel and hence, the pair remains vulnerable to continue with its well-established bearish trajectory.
The 1.2735-25 region, the lower end of the mentioned trading range, might continue to act as an immediate support. A convincing break below the said support is likely to accelerate the downfall towards the 1.2700 handle before the pair eventually drops to test June 2017 lows, around the 1.2600-1.2590 region, with some intermediate support near the 1.2640-35 area.
On the flip side, any meaningful recovery attempt might continue to confront some fresh supply near the short-term descending trend-channel support break-point, now turned resistance, currently near the 1.2800-1.2810 region. A sustained move beyond the mentioned hurdle might trigger a near-term short-covering bounce and assist the pair to aim towards reclaiming the 1.2900 handle.
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