GBP/USD struggles to sustain above 1.40 handle
| • Good two-way price-action on Brexit headlines.
• A strong USD prompts fresh selling on every uptick.
The GBP/USD pair continued with its good two-way price action through the early NA session and struggled to sustain/build on its move beyond the key 1.40 psychological mark.
The pair initially dropped to an intraday low level of 1.3931 before catching some strong bids on a news report that the EU parliament is putting together a detailed resolution, which will call for more flexibility in future relationship talks with Britain.
The up-move, however, quickly ran out of steam amid a strong follow-through US Dollar buying interest. The subsequent dip to 1.3965 level was bought into but once again met with some aggressive selling near the 1.4015 region.
Today's price-action clearly seems to suggest indecision amid absent fundamental drivers. Hence, Wednesday's key UK monthly jobs report and the latest FOMC meeting minutes might now act as important determinants for the pair's near-term trajectory.
Technical outlook
Valeria Bednarik, Chief Analyst at FXStreet writes: “Technically, the downward potential seems still limited according to readings in the 4 hours chart, as despite developing below its 20 MA, it's still above the 200 EMA, while technical indicators bounced off their daily lows and hover below their mid-lines without clear directional strength. The pair would need to advance beyond 1.4025 to have chances of recovering further, while below 1.3970, it will likely resume its decline to fresh lows.”
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