GBP/USD bears take on fresh breakout lows near 1.2050

• GBP/USD has made fresh breakout lows to 1.2050s.
• Bears eye a continuation following a healthy correction. 

GBP/USD is making a fresh breakout low in North American trade on Wednesday. GBP/USD is down by some 8% to 1.2070 having travelled from a high of 1.2191 to a low of 1.2055 The pound dropped as British public borrowing hit a November record, underscoring the challenges for the UK economy. Meanwhile, the greenback is picking up a safe haven bid as investors worry that an upcoming recession could keep the Federal Reserve from holding interest rates at higher levels in the FOMC’s projections last week to tame inflation.

In the Fed's December meeting, the central bank raised interest rate by a more moderate 50 basis points but indicated that the terminal rate could reach 5.1% next year, higher than markets anticipated. Meanwhile, analysts at Rabobank said that for the GBP outlook to significantly advance it is likely that investment and productivity growth will have to show signs of improvement,'' analysts at Rabobank argued.

''This may require more visible leadership from PM Sunak, though divisions in his own party will likely prove difficult to manage.  Additionally, while a workable solution over the Northern Ireland protocol could bring fresh clarity over the UK’s relationship with Europe, this remains a deeply challenging issue.  On balance, we expect UK fundamentals to remain sour in the months ahead.''

As for the technical outlook, GBP/USD remains on the backside of the late September rally's trendline where the pair gained some 20% in the quarter so far, albeit shedding gains to around 3% to the current spot price and consolidation lows of 1.20975.

GBP/USD technical analysis

Still, the Pound Sterling is on track for its best quarter in more than 13 years. However, However, GBP/USD remains about 10% lower for the year and the following analysis is going to be through the eyes of the bears. 

The bearish wicks have been a compelling feature which put the emphasis on a test of 1.2080 and below: