GBP/USD corrects further to mid-1.2700s, fresh session lows
| • Fading trade optimism helps revive USD demand and prompts some selling.
• Brexit uncertainties continue to weigh on the GBP and add to the pressure.
• Speeches by various Fed officials eyed for short-term trading opportunities.
The GBP/USD pair held on to its weaker tone through the mid-European session and is currently placed at the lower end of its daily trading range, around mid-1.2700s.
The pair continued with its struggled to sustain/build on the overnight momentum further beyond the 1.2800 handle and was now being weighed down by a modest US Dollar rebound from dovish FOMC minutes-led decline to three-month lows.
Minutes from the December FOMC policy meeting revealed a dovish tilt and showed a general consensus among policymakers that the Fed could be patient with further policy tightening, reinforcing expectations that there will be no hikes in 2019.
With investors still digesting the dovish outlook, a slight deterioration in risk-appetite amid a lack of clarity over the US-China trade talks underpinned the greenback's relative safe-haven status and seemed to prompt some selling at higher levels.
Meanwhile, Brexit uncertainties, like a possible second referendum or a no-deal outcome, continued denting sentiment surrounding the British Pound and further collaborated towards exerting some downward pressure on the major.
In the latest Brexit developments, the UK Parliament on Wednesday voted in favour of the amendment to force the government to announce the next steps if the PM May's withdrawal agreement is voted down next week on Tuesday, January 15.
Moving ahead, the incoming Brexit headlines will remain a key driver for the British Pound, though scheduled speeches by influential FOMC members, including the Fed Chair Jerome Powell, produce some meaningful trading opportunities on Thursday.
Technical levels to watch
Any subsequent slide might continue to find immediate support near the 1.2710-1.2700 region, below which the pair might turn the pair vulnerable to head back towards testing the 1.2600 round figure mark with some intermediate support near the 1.2640-35 region.
On the flip side, the 1.2800-1.280 remains a key barrier, which if conquered might prompt a near-term short-covering move and increase the prospects for an extension of the pair’s positive momentum towards testing 100-day SMA, near the 1.2895-1.2900 region.
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