GBP/USD extends the Asian retreat towards 1.3400, US data eyed

The GBP/USD pair remains heavily offered in early Europe, as the bears gear up for a test of 1.34 handle amid underlying broad USD demand.

GBP/USD headed to 20-DMA at 1.3360?

The spot faced stiff resistance near 1.3460 region in the Asian trades, and from there extended the retreat, as the buying interest appears to pick up pace behind the US dollar against its main peers, backed by higher Treasury yields.

Overnight hawkish comments from the Fed Chair Yellen bolstered Dec Fed rate hike bets and drove Treasury yields higher across the curve, in turn invigorating the demand for the buck.

Also, expectations over Trump’s tax overhaul plan announcement due later on the day, keeps the bid tone underpinned around the US dollar against its British counterpart. Meanwhile, the sentiment around the pound remains somewhat depressed amid a lack of clarity on the Brexit strategy, after the UK PM May’s speech disappointed markets last week.

Next of note for the major remains the US durable goods and pending home sales data due later in the NA session. Besides, speeches by the FOMC members Bullard and Brainard will be also eyed, as traders digest the dovish remarks from the former BOE MPC member Blanchflower.

Ex-BOE’s Blanchflower: "Absolutely no basis" for a rate hike as early as November”

GBP/USD levels to consider             

According to Karen Jones, Analyst at Commerzbank, “GBP/USD is slowly inching back from critical medium term resistance at 1.3600/70, which represents a double Fibo and the 2014-2017 downtrend. Given the convergence of resistance here we would expect this to continue to hold the initial test and provoke some profit taking. However currently the intraday Elliott wave counts are positive. In order to alleviate immediate upside pressure the market will need to fall sub 1.3267 (August high).”