GBP/USD looks south towards 1.3350 amid Brexit woes, ahead of UK PMI

• GBP/USD resumes the downside after rejection above 1.3400.
• Brexit woes, steady USD weigh on the cable, with eyes on the UK/US PMIs.
• The 4H technical setup remains in favor of GBP bears.

GBP/USD is trading modestly flat below 1.3400, having failed to find acceptance above the latter, as markets remain cautious amid Fed’s tapering bets, looming covid and Brexit concerns.

The UK Brexit minister David Frost said divergence from the European Union (EU) rules ‘national necessity’ as he defends trade policy. His comments come a day after the European Commission Vice President Maroš Šefčovič accused the UK Brexit Minister David Frost of ‘political posturing’ over the Northern Ireland (NI) protocol.

Meanwhile, the sentiment around the US dollar remains broadly underpinned by the increasing odds of faster Fed’s tapering after President Joe Biden renominated Jerome Powell as the Fed Chair for another four-year tenure.

In the session ahead, the UK Markit Preliminary PMIs will hog some limelight while the dynamics in the dollar and the yields will continue to play out.

Looking at GBP/USD’s four-hour chart, the bearish bias remains will on the table after the price breached the rising trendline support at 1.3420 on a sustained basis in the US last session.

A sell-off towards the November lows of 1.3353 cannot be ruled out if the daily lows near 1.3385 give way on a sustained basis. 

The Relative Strength Index (RSI) remains below the midline, allowing room for more declines.

GBP/USD: Four-hour chart

On the upside, cable’s recovery will meet initial supply at the rising trendline support-turned-resistance, now at 1.3426.

Further up, the mildly bearish 50-Simple Moving Average (SMA) at 1.3434 could be tested.

GBP/USD: Additional levels to consider