GBP/USD to suffer additional losses with a drop below 1.3600

GBP/USD extends its downward correction and continues to edge lower toward 1.3600. Risk-averse market environment and rising US T-bond yields favour the bears, FXStreet’s Eren Sengezer reports.

Pound looks vulnerable amid risk aversion

“The sharp upsurge seen in the US Treasury bond yields ahead of next week's FOMC policy meeting helps the greenback find demand early Tuesday.”

“In case safe-haven flows continue to dominate the financial markets in the second half of the day, the risk-sensitive GBP could find it hard to stay resilient against the greenback.”

“The Fibonacci 23.6% retracement level of the one-month uptrend forms strong support at 1.3600. In case a four-hour candle closes below that level, the pair could extend its slide to 1.3560 (100-period SMA) and 1.3530 (Fibonacci 38.2% retracement).”

“On the upside, the lower limit of the ascending channel and the 20-period SMA align as key resistance at 1.3680. If the pair manages to return within that channel, it could target 1.3700 (psychological level) and 1.3725 (middle line of the ascending channel).”