GBP/USD corrects farther below 1.31 handle

Haresh Menghani FXStreet

The British Pound remained on the back foot through the mid-European session, dragging the GBP/USD pair to fresh session lows near the 1.3060-55 band.

A minor greenback recovery from 10-month lows prompted traders to take some profits off the table, especially after last week's strong upsurge of around 300-pips from the 1.2800 neighborhood. However, fading expectations of a Fed rate hike action in September capped any meaningful US Dollar recovery and helped limit further downside.

• US: Market doubts continue on Fed rate hikes - ING

Currently hovering around the 1.3070 region, traders now look forward to the release of Empire State Manufacturing Index from the US for some fresh impetus. Meanwhile, any news coming out of the Brexit negotiations would also influence sentiment surrounding the major.

From a technical perspective, Friday’s strong up-move beyond the 1.3030-50 important resistance could be seen as a fresh bullish breakout and hence, the pair remains poised to extend its near-term upward trajectory.

• GBP/USD stays bid near-term – Commerzbank

Technical levels to watch

From current levels, the 1.3100 handle could act as immediate resistance, above which the pair is more likely to extend the bullish momentum towards 1.3165-70 resistance area. On the flip side, 1.3050-30 resistance break area now seems to protect the immediate downside, which if broken could extend the corrective slide back towards the key 1.30 psychological mark.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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