Geopolitical concerns provided a new reason for sterling to falter at familiar resistance on Tuesday, leaving it vulnerable to a return to at 1.2598.

GBP/USD failed to hold within its Bollinger envelope, faltering at resistance for a third session near 1.27 as fears over Russia's new nuclear doctrine fueled a safe-haven dollar bid.

Though fueled by a sudden adjustment in perceived geopolitical risk, the dip in GBP/USD indicates the path of least resistance and risks for GBP/USD are tipped to the downside.

With the Fed policy path seen more restrictive in the near-term and President-elect Donald Trump's trade policies and political appointments geared toward a higher USD and perhaps lingering inflation, GBP/USD is likely to remain on the back foot.

Technically, recent bearish crosses add to the offered tone for GBP/USD. Both the 30- and 10-DMAs have crossed below longer term daily averages, providing fodder for sales.

Sterling net spec long positioning may also be providing pressure on GBP/USD. As of Friday's IMM data release, sterling bulls added to longs. However, since the close of the last IMM period on Nov. 12 sterling has continued lower, likely causing recent and entrenched longs to exit.

With technical and fundamentals hinting at further downside risks, a close below support at 1.2598 is likely to create increased selling, putting the May 9 low at 1.2446 in sharper focus.

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(Paul Spirgel is a Reuters market analyst. The views expressed are his own)

((paul.spirgel@thomsonreuters.com))