The GBP/USD pair remained under some selling pressure on Wednesday and touched an intraday low level of 1.2661, the lowest level since late-June last year. Traders shrugged off mostly in-line UK CPI print, which marked its first gain since November, with increasing prospects for a no-deal Brexit, continued exerting downward pressure on the British Pound. This coupled with a strong US Dollar upsurge, further boosted by stronger than expected monthly retails sales data, added to the selling bias and pushed the pair to a new one-year low.
However, a brief pause in the ongoing USD upsurge prompted some short-covering and helped the pair to rebound around 35-40 pips from lows. The recovery move extended through the Asian session on Thursday and remained supported by a follow-through USD profit-taking, this time triggered by news that the US and China are going to resume trade talks. The pair has now moved back closer to overnight swing high, around the 1.2730-35 region, as traders now look forward to the UK monthly retail sales data for some fresh impetus.
Looking at the technical picture, a short-term descending trend-line has been capping any attempted recovery moves since the beginning of this month. Hence, it would be prudent to wait for a decisive break-through the mentioned barrier, currently near the 1.2765-70 region, before assuming that the pair might have bottomed out in the near-term.
Above the said hurdle, the recovery momentum seems more likely to lift the pair back above the 1.2800 handle towards testing its next major resistance near the 1.2825-30 region. A follow-through buying has the potential to continue lifting the pair further towards reclaiming the 1.2900 round figure mark.
Alternatively, a sustained weakness back below the 1.2710-1.2700 region would expose the pair to continue with its well-established bearish trajectory and aim towards testing the 1.2600 handle, with some intermediate support near the 1.2660 area (near 14-month lows set in the previous session).
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