GBP/USD meets fresh supply, tests 1.3950 ahead of US data

The GBP/USD recovery once again lost legs just below the 1.40 mark, now pushing the rates to break through the midpoint of the 1.39 handle, as the demand for the greenback has returned to the markets amid ebbing fears of a global trade war. The USD index extends recovery from 89.62 lows to now trade near daily tops of 89.77, almost unchanged on the day.

Despite the renewed weakness, the spot is likely to remain confined within in a narrow in the day ahead. Haresh Menghani, Analysts at FXStreet writes, with an empty UK economic docket, traders look forward to the second-tier US data - regional manufacturing indices and weekly initial jobless claims data, in order to grab some short-term opportunities.

GBP/USD levels to watch

Haresh adds: “Technically, the pair managed to bounce off a short-term descending trend-line resistance break-point, now turned support, and hence, remains poised to extend the bullish trajectory towards testing the 1.4030-40 barrier, marking 23.6% Fibonacci retracement level of the 1.3039-1.4345 upsurge. On the flip side, 1.3955 level might continue to protect the immediate downside but the major support remains near the 1.3925-20 region. A convincing break below the mentioned support might now prompt some long-unwinding trade and accelerate the fall towards 38.2% Fibonacci retracement level support near the 1.3850-45 region en-route the 1.3800 round figure mark.”