GBP/USD extended its recent slide on Tuesday, hitting a 5-1/2-month low of 1.3573 before trimming losses slightly in U.S. trade as risk markets bounced, but it was still at risk of further declines after sustaining technical damage.
Monday's break below 200-DMA support has opened the way for further declines to the 55-week moving average at 1.3502 and more significant support at 1.3463, the 50% Fib of 1.2676-1.4250 the September 2020-June 2021 rise.
Below the 50% Fib bears would gain momentum for tests of late-December 2020 lows by 1.3305 and 1.3190.
GBP/USD was last down 0.41% on the day at 1.3617, while EUR/GBP was up 0.21% at 0.8648.
One of early 2021's biggest gainers, cable's rally has unraveled and it is now down 0.69% year-to-date.
Sterling's early 2021 rise was predicated on post-Brexit optimism and the UK's rapid vaccine rollout, which had lifted UK rate normalization expectations.
With UK-EZ negotiation on Northern Ireland trade deadlocked and the rise in COVID Delta-variant cases early 2021 GBP longs have been unwinding.
GBP/USD spec long positioning peaked in early March at +36.1k contracts but fell to +8k as of July 13.
With GBP having fallen further that has likely reduced to nearer flat in the current IMM reporting period ending later on Tuesday.
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