GBP/USD drops below 1.3750 amid USD rebound, Brexit woes, Jackson Hole eyed
- GBP/USD turns red for the first time in four days, eases towards 1.3700.
- GBP bulls give into the bear cross and resurfacing Brexit concerns.
- 200-DMA caps gains, daily support line limits losses ahead of key event risks.
GBP/USD is retreating towards 1.3700, having faced rejection once again near the 1.3770 region.
The pullback in the cable from six-day highs comes on the heels of a broad-based US dollar rebound, as the risk-off flows return amid mounting concerns over the Delta covid variant contagion and ahead of the highly influential Fed’s Jackson Hole Symposium. Day one of the three-day Fed event starts later this Thursday.
Besides, the dollar’s price action, the cable also bears the brunt of the renewed post-Brexit jitters, with the UK government supply chain crisis could “cancel Christmas” and continue to cause food shortages well into 2022.
Meanwhile, business leaders call for relaxation of post-Brexit visa rules to avoid the supply-chain crisis, courtesy of the post-Brexit migration rules. Further, fears over the Delta covid variant spread continues to loom worldwide, weighing on the market mood, capping the riskier asset’s, the pound, upside.
GBP/USD: Technical outlook
As observed on the daily chart, the bearish crossover of the downward-sloping 50-Daily Moving Average (DMA) and 21-DMA has recalled the sellers.
The 14-Day Relative Strength Index (RSI) has turned south below the 50.00 level, adding credence to the renewed downside in the currency pair.
Therefore, immediate support is seen at 1.3700, below which the 1.3650 psychological barrier will be in sight.
Further south, powerful support emerges around 1.3610, where the August 23 low and the ascending trendline coincide.
GBP/USD: Daily chart
Alternatively, acceptance above the recent range highs near 1.3770 could revive the bullish momentum, calling for a fresh advance towards the horizontal 200-DMA resistance at 1.3796.
The next relevant upside hurdle is seen at the August 10 low at 1.3827.
GBP/USD: Additional levels to consider