Having failed to extend early up-move, the GBP/USD pair ran through some fresh offers and retreated back to the 1.2800 handle.
The pair failed to benefit from yet another disappointment from the US economic data, with the latest coming from a larger-than-expected rise in the weekly jobless claims (244K against 242K expected and 234K previous) and a sharp drop in the Philly Fed manufacturing index for April (actual 22, 25 estimated and 32.8 in March).
Against the backdrop of Tuesday's announcement by the UK PM Theresa May, calling for a snap election on June 8, market players might be anticipating some dovish comments from the BOE Governor Mark Carney, due to speak later during the NY session, and could have prompted some long-unwinding pressure.
Meanwhile, the pair's pull-back from highs could also be attributed to the latest revision of EU governments' Brexit negotiating guidelines, demanding simple administration for citizens and asking UK to resolve ECB financial issues.
It, however, remains to be seen if the retracement is actually driven by any fundamental factors or is just a technical pull-back.
Apart from Carney's speech, investors would also closely scrutinize comments by the US Treasury Secretary Steven Mnuchin where any specific remarks over currency valuations might trigger a fresh bout of volatility during the NY session.
Technical levels to watch
Bulls would be disheartened if the pair fails to hold the immediate support near 1.2775-70 zone, which if broken could accelerate the slide towards 1.2725 level en-route the 1.2700 handle. On the upside, 1.2850-60 zone now seems to have emerged as immediate resistance, above which the pair is likely to aim back towards reclaiming the 1.2900 handle.