GBP/USD: Slide Below Yearly Lows Remains A Distinct Possibility

• Persistent fears of a no-deal Brexit continue to cap any attempted up-move.
• The prevalent USD bullish sentiment further adds to the bearish pressure.
• Traders look forward to the US Q2 GDP print for some meaningful impetus.

The GBP/USD pair built on the previous session's rebound from weekly lows and gained some follow-through traction on Thursday, albeit once again failed to find acceptance above the key 1.2500 psychological mark. A modest US Dollar pullback from multi-week lows - primarily led by the post-ECB sharp rebound in the shared currency, provided some intraday lift and lifted the pair back closer to the 1.2520 supply zone. However, upbeat release of the US durable goods orders data reaffirmed expectations that the Fed is unlikely to deliver a 50 bps rate cut at its upcoming meeting on July 30-31 and was evident from a strong pickup in the US Treasury bond yields, which helped limit the USD profit-taking slide and kept a lid on any strong follow-through up-move for the major.

Meanwhile, the British Pound was further weighed down by the new Brexit PM Boris Johnson's first statement in the House of Commons, reiterating his commitment to leave the EU on October 31 and that backstop must be abolished in order to reach a deal. Johnson further added that we will have to leave without a deal if the EU is not ready to make changes to the withdrawal agreement. This was followed by the European Union's Brexit negotiator Michel Barnier's remarks that Johnson's demand to eliminate the backstop was unacceptable, which did little to ease fears of a no-deal Brexit and exerted some downward pressure on the major.
The pair finally settled with modest losses, marking its fourth consecutive day of downtick, and now seems to have entered a bearish consolidation phase, oscillating in a narrow trading band around mid-1.2400s through the Asian session on Friday. In absence of any major market-moving economic releases from the UK, the incoming UK political/Brexit headlines might continue to influence the broader market sentiment surrounding the Sterling. Later during the early North-American session, the first estimate of the US Q2 GDP growth figures might influence the USD price dynamics and produce some meaningful trading opportunities on the last day of the week.

From a technical perspective, the pair's inability to capitalize on attempted positive moves suggest persistent selling bias at higher levels and support prospects for a further near-term depreciating move. A follow-through weakness below the 1.2420-15 region (weekly lows) will reinforce the bearish outlook, which might turn the pair vulnerable to break through the 1.2400 round figure mark and challenge yearly lows around the 1.2380 region. The downward momentum could further get extended towards testing support marked by the lower end of a five-month-old descending trend-channel, currently near the 1.2325 region.

On the flip side, the 1.2480-85 region now seems to act as immediate resistance and is closely followed by the 1.2500 handle. However, the 1.2520-25 supply zone remains a key barrier, which if cleared might assist the pair to aim towards testing the 1.2575-80 region ahead of the 1.2600 round figure mark.

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