GBP/USD Outlook: Near-term bias shifts back in favour of bearish traders

• GBP/USD kicked off the new week on a positive note amid the easing of restrictions in the UK.
• The intraday positive move quickly ran out of steam amid the prevalent USD buying interest.
• The upbeat US economic outlook, rising US bond yields continued underpinning the greenback.

The GBP/USD pair had some good two-way price moves on the first day of a new trading week and was influenced by a combination of diverging forces. The British pound was supported by the optimism over a highly-successful vaccination distribution program and the easing of some lockdown restrictions in England. Apart from this, some cross-driven strength stemming from a sharp fall in the EUR/GBP and an intraday spike in the GBP/JPY provided an additional lift to the major. That said, sustained US dollar buying kept a lid on any further gains, rather prompted fresh selling at higher levels.

The upbeat outlook for the US economy continued underpinning the USD, which was further boosted by a fresh leg up in the US Treasury bond yields. The impressive pace of coronavirus vaccinations and the passage of a massive stimulus package have been fueling hopes for a relatively faster US economic recovery from the pandemic. Also feeding the expectations were the US President Joe Biden's ambitious pledge of administering 200 million vaccine shots in 100 days and speculations for an additional $3.0 trillion infrastructure spending plan from the Biden Administration. 

The pair retreated around 90 pips from four-day tops and finally settled near the lower end of its daily trading range, just above mid-1.3700s. The pair, however, managed to regain some traction during the Asian session on Tuesday as the USD bulls now move on the sidelines ahead of Friday's release of the closely-watched US monthly jobs report (NFP). In the meantime, Tuesday's release of the Conference Board's Consumer Confidence Index will be looked upon for some trading opportunities later during the early North American session. There isn't any major market-moving economic data due for release from the UK, leaving the pair at the mercy of the USD price dynamics.

Short-term technical outlook

From a technical perspective, the recent bounce from multi-week lows faltered near a resistance marked by the 50% Fibonacci level of the 1.4002-1.3671 decline. A subsequent slide below the 38.2% Fibo. level might have shifted the near-term bias back in favour of bearish traders. However, it will be prudent to wait for some follow-through selling below a confluence region near mid-1.3700s before positioning for any further depreciating move. The mentioned support comprises of 100-hour SMA and the 23.6% Fibo. level, which if broken decisively will be seen as a fresh trigger for bearish traders. The pair might then turn vulnerable to accelerate the slide further towards the 1.3700 mark before eventually dropping to monthly lows, around the 1.3670 area en-route 100-day SMA support near the 1.3640 region.

On the flip side, immediate resistance is pegged near the 1.3800 mark (38.2% Fibo.). This is followed by the 50% Fibo. level, around the 1.3835 region. Some follow-through buying beyond the overnight swing highs, just ahead of mid-1.3800s, will set the stage for a move beyond the 61.8% Fibo. level, around the 1.3875-80 region. The momentum might then push the pair beyond the 1.3900 round-figure mark, towards testing the next major hurdle near the 1.3955-60 region.