• Some initial signs of profit-taking at higher levels.
• Surging US bond yields underpin USD and prompt long-unwinding.
• UK PMI eyed for some impetus ahead of US ISM PMI and FOMC minutes.
The GBP/USD pair surrendered majority of its early strong gains to 3-1/2 month tops and quickly retreated to the lower end of its daily trading range.
The pair's retracement over the past hour or so lacked any obvious catalyst and could be solely attributed to some profit-taking, especially after the recent upsurge of over 250-pips since last Tuesday. Against the backdrop of Tuesday's softer UK manufacturing PMI print, traders now seemed inclined to take some profits off the table in anticipation of yet another disappointment from today's UK construction PMI.
Meanwhile, a sharp follow-through upsurge in the US Treasury bond yields, which helped ease some of the strong bearish pressure surrounding the US Dollar, also seems to have prompted some long-unwinding pressure at higher levels.
Today's economic docket also features the release of US ISM manufacturing PMI, which might provide some short-term trading opportunities but is likely to be overshadowed by some repositioning trade ahead of the December FOMC meeting minutes, due later during the US session.
Technical levels to watch
A subsequent retracement below the 1.3585-80 region is likely to extend the corrective slide towards mid-1.3500s, below which the pair might break below the key 1.35 psychological mark and test 1.3480-75 horizontal support.
On the flip side, sustained move beyond 1.3610-15 area has the potential to continue lifting the pair back towards 2017 yearly highs resistance near the 1.3655-60 region.
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