GBP/USD drops to session low, below mid-1.3200s amid notable USD demand
| • Resurgent USD demand prompts some fresh selling.
• UK political drama keeps GBP bulls on the defensive.
Having posted a session high level of 1.3285, the GBP/USD pair turned lower and has now dropped to the lower end of its recent consolidative trading range.
The latest UK political developments, wherein the PM Theresa May could face a formal leadership challenge, kept the GBP bulls on the back-foot. This coupled with resurgent US Dollar demand prompted some fresh selling around the major.
News of additional US tariffs of 10% on around $200 billion worth of Chinese imports pushed fears of a trade war back into focus and triggered a fresh wave of risk-aversion trade, which was eventually seen boosting the greenback's safe-haven appeal against the British Pound.
The pair has now retreated back towards overnight swing lows touched in the aftermath of disappointing UK manufacturing/industrial production data and hence, a follow-through weakness, led by some fresh technical selling, now looks a distinct possibility.
Investors now look forward to the BoE Governor Mark Carney's scheduled speech, at the National Bureau of Economic Research conference, for some fresh impetus.
Technical levels to watch
Immediate support is pegged near the 1.3225 area and is closely followed by the 1.3200-1.3190 region handle, below which the pair is likely to accelerate the slide towards 1.3140 horizontal support.
On the upside, momentum beyond 1.3270 level might continue to confront fresh supply near the 1.3300 handle and any subsequent up-move seems more likely to remain capped at 50-day SMA, currently near the 1.3345 region.
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