GBP/USD flirting with lows near mid-1.2600s

The GBP/USD pair extended previous session's retracement from levels beyond the 1.2700 handle and held weaker through early NA session on Thursday.

The pair came under some fresh selling pressure and eroded part of previous session's strong recovery gains, led by hawkish comments by BoE's Chief Economist Andrew Haldane, amid persistent political uncertainty in the UK. Lack of clarity over the prospects of a deal between the Conservatives and DUP, to allow PM Theresa May to maintain a minority government, has been one of the factors that continues to weigh on the British Pound. 

Even a subdued US Dollar action, in wake of a fresh leg of downslide in the US Treasury bond yields, did little to extend any support, albeit seems to have collaborated towards limiting any immediate sharp downslide, at least for the time being.

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Meanwhile, markets had a muted reaction to the usual weekly jobless claims data from the US, which although showed a modest rise in the number individuals claiming for unemployment related benefits but remained closer to multi-decade lows.

Next in focus would be the Federal Reserve Governor Jerome Powell's testimony before the US Senate Committee on Banking, ahead of BOE MPC member Kristin Forbes' speech at the London Business School.

The major would also be influence by any news / developments coming out of the UK PM Theresa May's meeting with the EU leaders on Brexit terms.

   •  UK: Things about to get tougher for PM May - BBH

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet writes: "Technically, the 4 hours chart shows that the risk remains towards the downside, with a bearish 20 SMA having contained advances ever since the day started, now around 1.2685, whilst technical indicators lost upward strength after bouncing from oversold readings, now flat  within negative territory. The immediate support comes at 1.2635, with a break below it exposing the 1.2590 region, where the pair bottomed earlier this week. Further slides will favor an approach to the 1.2500 region during the following sessions."

"To gain some bullish traction, the pair needs to extend beyond 1.2720, with scope then to extend its recovery up to 1.2760" she added further.