GBP/USD retests YTD lows, around mid-1.3400s

The GBP/USD pair continued losing ground through the early North American session and tumbled back closer to YTD lows, around mid-1.3400s touched in January.

The pair added to the previous day's heavy losses and remained under intense selling pressure for the second consecutive day. This also marked the third day of a negative move in the previous four and was sponsored by a relentless US dollar rally. In fact, the key USD Index shot to near 11-month tops, around the 94.00 mark and remained well supported by a combination of factors.

The intensifying energy crisis in China resurfaced fears of a global economic slowdown and benefitted the greenback's status as the global reserve currency. Adding to this, prospects for an early policy tightening by the Fed further acted as a tailwind for the greenback. This, to a larger extent, helped offset the looming US debt ceiling and retreating US Treasury bond yields.

On the other hand, the British pound was undermined by increasing signs of the fuel crisis in the United Kingdom due to the post-Brexit shortage of truck drivers. Britain has been gripped by a rush of panic-buying for almost a week after oil companies warned they did not have enough tanker drivers to move petrol and diesel from refineries to filling stations.

Apart from this, technical selling below the key 1.3500 psychological mark further aggravated the bearish pressure around the GBP/USD pair. That said, extremely oversold RSI on hourly charts might hold traders from placing fresh bearish bets. The focus now shifts to Fed Chair Jerome Powell and the Bank of England Governor Andrew Bailey's remarks at an ECB forum in Sintra.

Technical levels to watch