GBP/USD rebounds from sub-1.3400 level, fresh yearly lows

• Easing US-China trade tensions provides a fresh boost to the already stronger USD.
• Reemerging Brexit concerns add to the downward pressure on the British Pound.
• A modest USD retracement triggers a short-covering move and helps bounce off lows.

The GBP/USD pair quickly reversed an early European session dip to sub-1.3400 level and recovered around 40-45 pips from lows, albeit lacked any follow-through.

With investors looking past the latest positive development over the US-China trade talks, a modest US Dollar profit-taking was seen as one of the key factors behind the pair's shallow short-covering bounce from YTD lows.

However, sentiment surrounding the British Pound remains weaker on the back of reemerging Brexit concerns, which might now continue to keep a lid on any meaningful up-move ahead of this week's important releases/events.

The BoE's inflation report hearings on Tuesday, followed by important UK macro releases would help evaluated possibilities of an eventual BoE rate hike move in August and influence the British Pound's near-term momentum.

This coupled with the release of latest FOMC meeting minutes and US durable goods orders would further help investors determine the next leg of a directional move for the major. In the meantime, speeches from influential FOMC member might provide some short-term impetus on the first trading day of a new week.

Technical levels to watch

Any subsequent recovery is likely to confront resistance near the 1.3450 level, above which a fresh bout of short-covering could further lift the pair towards reclaiming the key 1.3500 psychological mark.

On the flip side, the 1.3400 handle might continue to extend some immediate support, which if broken might turn the pair vulnerable to accelerate the fall towards 1.3340 intermediate support en-route the 1.3300 handle.

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.