GBP/USD rebounds sharply after crashing, back around 1.40 mark
| • Fat-finger trade triggers extreme volatility.
• Reviving USD demand does little to cap gains.
The GBP/USD pair quickly reversed the mid-European session crash to the 1.3900 handle and is now eyeing a move beyond the key 1.40 psychological mark.
The volatile price action over the past few hours clearly lacked any fundamental catalyst and the sudden plunge seemed more of a fat-finger trade and hence, was followed by an equally sharp recovery.
The pair seemed unaffected by a modest bid tone surrounding the US Dollar, which although has failed to benefit further on the back of weaker US Treasury bond yields.
Meanwhile, the comments by BOE Deputy Governor David Ramsden did little to influence the British Pound, with some repositioning trade acting as an exclusive driver of the pair's momentum on the last trading day of the week.
In absence of any major market moving economic releases, traders now look forward to speeches by influential FOMC members, which would drive the greenback and eventually provide some fresh short-term trading opportunities.
Technical outlook
Yohay Elam, Analyst at FXStreet writes: “$1.3905 is the immediate level of support, followed by $1.3860, the low on Thursday. The $1.3770 level awaits below. Looking up, $1.4140, $1.4250, and $1.4340 were recent highs.”
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