GBP/USD drops to fresh lows, around mid-1.3800s ahead of US data

Haresh Menghani FXStreet

• Retreats over 75-pips amid reviving USD demand.
• US macro data eyed for fresh directional impetus.

The GBP/USD pair extended its retracement slide from the 1.3925-20 supply zone and refreshed session lows in the last hour.

Currently trading around mid-1.3800s, the pair has now eroded a major part of previous session's UK CPI-led up-move and was being weighed down by a modest pickup in the US Dollar demand.

A goodish rebound in the US Treasury bond yields helped the greenback to recover early lost ground and has been one of the key factors behind the pair's retracement slide of over 75-pips from Asian session highs.

From a technical perspective, the pair is retracing from a short-term descending trend-line resistance and hence, a deeper pull-back, led by some additional long-unwinding, now looks a distinct possibility.

Investors' focus would remain glued to the upcoming US economic releases - the latest consumer inflation figures and monthly retail sales, which would help determine the next leg of directional move.

Technical levels to watch

A follow-through selling pressure has the potential to continue dragging the pair towards its next support near the 1.3810-1.3800 region, below which the slide could further get extended towards 1.3765 level (near 4-week lows set last Friday).

On the upside, the 1.3890 region now seems to act as an immediate resistance and any subsequent up-move might continue to confront fresh supply near the 1.3920-25 region.

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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