The upward move in GBP/USD petered out after two failed attempts to overcome 1.4240 earlier this year in February and June. A steady downtrend has taken shape from those levels. Economists at Société Générale note the prevalence of downward momentum and expect the cable to test the 1.3130/1.3000 support zone.

Overcoming 1.3800/1.3840 will denote the return of bullish momentum

“GBP/USD has now reached the weekly Ichimoku cloud and is within touching distance of the potential support zone at 1.3130/1.3000, representing projections for the downward move and close to the 38.2% retracement from 2020.” 

“Defending the 1.3130/1.3000 zone could result in a bounce; however, the 200-DMA near 1.3800/1.3840 will be a crucial resistance level in the near-term. Overcoming this hurdle will be pivotal, as it will denote the return of bullish momentum.”