GBP/USD came under renewed bearish pressure and dropped below 1.3350 in the early American session. Boosted by the upbeat data releases from the US, the US Dollar Index climbed to its highest level since July 2020 and was last seen approaching 97.00. After failing to break above 1.3400, GBP/USD has met fresh selling pressure and touched its lowest level of 2021 at 1.3341 on Tuesday. The technical picture doesn't point to a recovery in the near term and the pair will remain at the mercy of the dollar's valuation, which has been driven by the US Treasury bond yields.

A combination of factors failed to assist the GBP/USD pair to capitalize on the overnight bounce from the 1.3340 area, or the lowest level since December 2020, instead prompted fresh selling on Wednesday. The impasse over the post-Brexit arrangement in Northern Ireland and fishing rights continued acting as a headwind for the British pound. This, along with the emergence of fresh buying around the US dollar, dragged the pair lower for the fourth successive day.

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

The Relative Strength Index on the daily chart stays above 30, suggesting that there is more room on the downside before the pair turns oversold. Additionally, GBP/USD continues to trade below the descending trend line coming from November 18, confirming the view that buyers are struggling to dominate the action.

In case a four-hour candle closes below the 1.3350/40 support area (static level, 2021-low), additional losses toward 1.3300 (psychological level) could be witnessed.

On the upside, 1.3380 (descending trendline) aligns as first resistance before 1.3400 (Fibonacci 23.6% retracement of the November 9-12 drop, psychological level, 20-period SMA) and 1.3440 (Fibonacci 38.2% retracement, 50-period SMA).

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