GBP/USD extends the recovery, 1.3550 tested

Having stalled its corrective slide near 1.3465 region, the GBP/USD pair extends its steady recovery path above 1.35 handle into early Europe, as the US dollar comes under fresh selling pressure against its main competitors.

GBP/USD: Will it sustain the bounce above 1.3500?        

The bulls now look to take-out 1.3.550 resistance in a bid to reclaim 1.36 mark, as cautious market sentiment weighs down on the US yields, dragging the US dollar broadly lower.

Meanwhile, the latest reports of the US Senate mulling over a $1.5 trillion tax cut for a budget also left the USD bull unimpressed, as all eyes now remain on the FOMC monetary policy decision due out tomorrow for fresh hints on the interest rates outlook.

Markets are widely expecting the Fed to announce the start of balance sheet normalization from next month, while keeping the bias for a rate hike this year intact.

On Monday, Cable reversed a part of last week’s rally on a broad based US dollar strength and on less hawkish-than expected comments from the BOE Governor Carney, as he reiterated that any rate hikes are expected to be ‘gradual’ and ‘limited’.

Calendar-wise, there is nothing of note for the major from the UK, and hence, attention turns towards the US building permits, housing starts and current account data due later in the NA session.

GBP/USD levels to consider             

Haresh Menghani, Analyst at FXStreet, writes: “Immediate resistance is pegged near mid-1.3500s, above which the pair is likely to head towards retesting the 1.3600 round figure mark. On the downside, any weakness back below the 1.35 handle and a subsequent drop below 1.3465 level seems more likely to find strong buying interest at a short-term ascending trend-channel resistance break-point, now turned support, near the 1.3440 region. Only a decisive break below the mentioned support would negate near-term bullish bias and trigger additional near-term corrective slide.”