GBP/USD reverses back below 1.2200 handle

Haresh Menghani FXStreet

The GBP/USD pair failed to build on the recovery momentum above 1.2300 handle and has now trimmed majority of its recovery gains to currently trade back below 1.2200 handle.

Currently hovering around 1.2180-90 region, the pair’s reversal from session peak gained momentum after UK's Brexit minister Davis, speaking in the parliament on Wednesday, said government cannot give details on its priority for Brexit negotiation and that the motion of a parliamentary discussion is only a debate, which would not change their path of negotiations.

Earlier on Wednesday, the pair witnessed a sharp rebound after British PMI Theresa May announced to hold a parliamentary vote on her plan to end UK's membership with the European Union.

Moreover, a broadly stronger greenback, as measured by the overall US Dollar Index, has been another factor driving the pair's reversal from session peak. Traders now look forward to the release of minutes from Federal Reserve's latest monetary policy meeting, which is expected to hint towards the timing of next Fed rate-hike action and provide impetus for the next leg of directional move for the US Dollar.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, notes, "The 4 hours chart shows that the price was capped by a bearish 20 SMA, whilst technical indicators have recovered from extreme oversold readings, but lost upward momentum and now consolidate well below their mid-lines, indicating that the risk remains towards the downside."

"The mentioned 20 SMA stands at 1.2340, and it will take a recovery above it to deny a bearish extension and see the pair extending its recovery up to the 1.2400 region."

"Below 1.2220 on the other hand, the pair will probably resumed its slide, with the next intraday supports at 1.2170 and 1.2130."

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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