GBP/USD bears eye a downside extension to test bull's commitments

GBP/USD maintains the bid at the start of the week, holding in at support as defined by the prior resistance.

Cable is trading up some 0.3% at the time of writing, having travelled between a range of 1.3668 and 1.3776 the high so far.

GBP has struggled this month so far and long positions have dropped to their lowest level since February. 

There has been a bout of profit-taking in recent sessions which have been triggered by a drop in the availability of vaccines in the UK for April and by a souring in the news about the Astra-Zeneca jab.

With that being said, some UK lockdown measures have been eased which has helped the pound to recover some of last week's losses, but traders are cautious as other countries catch up.

Indeed, investor attention focuses on whether or not the UK is capable of sustaining any real degree of outperformance.

Moreover, investors will note that the Bank of England interest rate-setter Silvana Tenreyro has said that removing fiscal or monetary policy support for the economy too early after last year's coronavirus slump could have a damaging effect on the labour market.

Meanwhile, US rates remains a driving force and traders await a highly anticipated US inflation and Retail Sales data in the coming days.

A fall in US yields last week triggered the worst week for the dollar in 2021 and in this respect, there is a focus on the US Treasury.

The Treasury will sell $120 billion in new coupon-bearing supply this week, though they are holding below one-year highs reached last month. 

As for the Consumer Price Index, investors are betting that price pressures will increase due to increased fiscal and monetary stimulus and as businesses reopen from COVID-19 related closures.

GBP/USD technical analysis

Cables' daily chart is compelling.

We have seen a significant retracement and the focus is on the downside.