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.