• Fails to sustain early up-move beyond 1.36 handle as USD recovers.
• Weaker US construction PMI adds to the downward pressure.
• US ISM PMI and FOMC minutes might provide fresh impetus.
The GBP/USD pair extended its profit-taking slide and refreshed session lows, around the 1.3560 region, during the early NA session.
The pair stalled its bullish momentum and witnessed a modest profit-taking slide this Wednesday. A goodish pickup in the US Dollar demand triggered the initial leg of a corrective slide from 3-1/2 month tops, levels beyond the 1.3600 handle.
The pair met with some additional supply following a yet another disappointing UK macro data. Against the backdrop of Tuesday's softer manufacturing print, the latest UK PMI came in to show that activity in the UK construction sector eased more than expected during December and further weighed on the British Pound.
Meanwhile, the market seems to have largely ignored a softer tone around the US Treasury bond yields, with the USD price dynamics acting as an exclusive driver of the pair's retracement slide on Wednesday.
Next in focus would be the release of ISM manufacturing PMI from the US and would be followed by the FOMC meeting minutes, which would now be looked upon for some fresh impetus ahead of Thursday's UK services PMI and the keenly watched NFP report on Friday.
Technical outlook
Valeria Bednarik, American Chief Analyst at FXStreet writes, “the bearish potential seems limited according to technical readings in the 4 hours chart, as the pair holds well above a bullish 20 SMA. In the mentioned chart, the Momentum indicator heads lower above its mid-line, while the RSI corrected overbought conditions, but turned flat around 67, indicating that sellers are still a minority. Nevertheless, the pair would need to surpass the mentioned daily high to turn intraday bullish, with the next probable target being then 2017 high at 1.3653.”
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