GBP/USD bulls take on the downtrend in the $1.37s

GBP/USD is trading near 1.3720 at the time of writing, virtually flat on the day following a sharp rally to the upside the prior day.

The pound has been regarded as a risk currency due to its twin deficits which leave it vulnerable to bouts of risk-off and vice versa at times of risk-on. 

Markets have recovered following concerns of late over timings of the Federal reserve's tapering and the rapid resurgence of the coronavirus in a new delta variant.

The pound added 0.7% vs the greenback that sank to test bullish commitments at a critical level on the DXY charts, 93.00.

Consequently, cable moved up through the psychological 1.3700 level.

However, survey data was published that showed Britain's post-lockdown economic rebound slowed sharply in August.

The IHS Markit/CIPS flash composite PMI dropped for the third month in a row, sliding to 55.3 from 59.2 in July - a sharper slowdown than economists had forecast.

Meanwhile, looking ahead, traders will be in high anticipation of the Federal Reserve symposium where Fed's chairman, Jerome Powell will be speaking on Friday.

He is expected by some to map out an end to stimulus and asset purchases.

However, those expectations have been dialled down in the markets following Fed's Robert Kaplan's comments from Friday.

Kaplan who is among the US central bank's most forceful supporters for starting to reduce support for the economy said on Friday that he may need to adjust that view if the Delta variant of the coronavirus slows economic growth materially.

GBP/USD technical analysis

GBP/USD Price Analysis: Bulls attack key Fibonacci retracement level above 1.3700