GBP/USD struggles near multi-month lows, around 1.3600 mark

The GBP/USD pair remained on the defensive through the early European session and was last seen hovering near the lower end of its intraday trading range, just below the 1.3600 mark.

The pair struggled to capitalize on the previous day's bounce from the lowest level since February 4 and edged lower for the fifth consecutive session on Wednesday. This also marked the seventh day of a negative move in the previous eight and was sponsored by a combination of factors.

The impasse over the Northern Ireland Protocol of the Brexit deal has soured ties between the UK and the European Union in recent months. This, along with the resurgence of the COVID-19 infections in the UK, acted as a headwind for the British pound and exerted pressure on the GBP/USD pair.

The UK's chief Brexit negotiator, David Frost, said on Monday that the protocol is not sustainable in its current form and all options remain on the table to solve the issue. Lord Frost is set to unveil the government's proposals for post-Brexit arrangements for Northern Ireland on Wednesday.

Meanwhile, COVID-19 cases are rising by more than 50,000 a day in the UK and hundreds of thousands of Britons are being asked to self-isolate for 10 days. This, along with sustained US dollar buying interest, further contributed to the weaker tone surrounding the GBP/USD pair.

From a technical perspective, this week's sustained break below the very important 200-day SMA – for the first time since July 2020 – might have already set the stage for further weakness. That said, bulls, so far, have been showing some resilience below the 1.3600 round-figure mark.

Moreover, there isn't any major market-moving economic data due for release on Wednesday, either from the UK or the US. This further makes it prudent to wait for some follow-through selling below the overnight swing lows, around the 1.3570 region, before positioning for any further decline.

Technical levels to watch