The GBP/USD pair extended its reversal move from one-month high and dropped to fresh session low near mid-1.2400s.
The pair failed to build on early strength and decisively break through the key 1.2500 psychological mark amid modest greenback recovery. In fact, the key US Dollar Index has managed to bounce off multi-week lows and prompted traders to take some profits off the table following the pair's strong up-surge on Tuesday led by the latest UK CPI print.
Moreover, the latest news report that Britain will be threatened with court action by the EU if it tries to walk away without paying a £50 billion “divorce bill” also seems to have collaborated towards capping further up-move for the major.
Meanwhile, market also seems to have digested the news that the UK PM Theresa May is set to reject Nicola Sturgeon’s demand for a new vote on Scottish referendum, with the greenback dynamics being an exclusive driver of the pair's retracement from the highest level since Feb. 24.
Next on tap would existing home sales data from the US, which might provide some impetus for short-term traders ahead of the release of UK monthly retail sales data on Thursday.
US: Existing home sales and Fed speak in focus - TDS
Technical levels to watch
A follow through retracement below 1.2440 level could get extended towards 100-day SMA support near the 1.2410 region and failure to this support now seems to trigger a corrective slide towards 1.2340-35 support area.
Meanwhile, a sustained move above the 1.25 handle should set the stage for continuation of the pair's upward trajectory towards 1.2525 intermediate resistance ahead of 1.2570 level (Feb. 24 high) and 1.2600 round figure mark.
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