GBP/USD rejected at 1.3835, surrenders 1.3800

The GBP/USD pair failed once again to sustain above the 1.38 handle, now accelerating the corrective slide from fresh post-Brexit vote highs reached at 1.3836.

GBP/USD back to test 5-DMA at 1.3768

The spot ran into the key resistance zone located near 1.3835, as the US dollar is seen recovering early losses versus its main peers, having dipped to the lowest levels since Dec 2014 at 89.98. The USD index looks to stabilize near 90.25 levels, as attention now turns towards the US industrial production data due later on Wednesday.

The AceTrader Team explained, “although the greenback snapped its recent losing streak initially on Tuesday and staged a rebound against the majority of its peers on short-covering, the intra-day decline in U.S. stocks where the Dow tumbled from record highs of 26086 triggered renewed broad-based USD selling in late New York trade.”  

Despite the latest upsurge, Cable remains weighed down by the uncertainty over the Brexit deal, especially after the UK PM May’s spokesman said that Britain will be the leaving EU. Earlier on Tuesday, the European (EU) Council President Donald Tusk's comments earlier that the UK can have a "change of heart" on Brexit and EU still open to the UK staying in the EU.

Meanwhile, with the UK core-CPI easing to 2.5% versus 2.7% previous, the BoE rate hike is back on the table. However, markets believe that the BoE may not hike rates this summer, as the Brexit fears ramp up, which in turn keeps a lid on the pound’s upside.

GBP/USD Technical Levels

Valeria Bednarik, Chief Analyst at FXStreet, noted “Technically, the 4 hours chart shows that the Momentum keeps easing within positive territory, but also that the 20 SMA maintains its bullish slope far below the current level, while the RSI hovers in overbought territory leaning the scale towards the upside. As commented on a previous update the pair has a strong static resistance area around 1.3835, February 2016 low, now the level to surpass to consider a steeper recovery ahead. Support levels: 1.3740 1.3700 1.3660. Resistance levels: 1.3800 1.3835 1.3860.”