GBP/USD extends rejection slide, retreats back closer to 1.3900 handle

Haresh Menghani FXStreet

• Brexit optimism now seems fully priced in.
• A modest USD rebound prompts profit-taking.
• Focus shifts to this week’s macro releases.

The GBP/USD pair extended its rejection slide from the key 1.40 psychological mark, fresh post-Brexit highs, and refreshed session lows in the last hour.

A goodish pickup in the US Dollar demand, supported by the Senate vote to keep the government funded for around three-weeks and despite a sharp retracement in the US Treasury bond yields prompted some long-unwinding/profit-taking move on Tuesday.

The market now seems to have fully digested overnight comments by the French President Emmanuel Macron, which reinforced optimism over a favourable divorce deal with the EU.

Even today's upbeat release of the UK public finances data did little to provide any fresh bullish impetus, with a modest USD rebound seen as the only factor weighing on the major through the mid-European session.

There aren't any major market-moving economic releases due from the US and hence, focus now shifts to Wednesday's UK employment details. This, along with other important macro data from the UK and the US would help investors determine the pair's next leg of directional move.

Technical levels to watch

Immediate support is pegged near the 1.3900 handle, which if broken could extend the corrective slide back towards mid-1.3800s en-route 1.3830-25 support. On the upside, 1.3945-50 zone now seems to act as an immediate resistance above which the pair is likely to make a fresh attempt towards conquering the 1.40 handle.

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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