GBP/USD slides further, aiming back towards 1.2200 handle

Haresh Menghani FXStreet

The GBP/USD pair extended its reversal from Wednesday's 6-day high level and dropped to a fresh session low level during early NA trading session.

Currently trading around 1.2230-35 band, few pips off session through level of 1.2216, the pair came under renewed selling pressure amid broad based US Dollar strength primarily led by a sharp reversal in the EUR/USD major after ECB President Mario Draghi failed to provide any clues over the central bank’s future plans and disappointing market players.

On the US economic data front, the Philly Fed Manufacturing Index retraced to 9.7 in October from September's 12.8, albeit was better-than 5.3 expected. Meanwhile, weekly jobless claims rose to 260K as against 250K expected and previous week's 247K. Mixed US economic data extended some support to the pair, which extended its offered tone following the disappointing release of UK monthly retail sales data for September.

Next on tap would be existing home sales data and the Conference Board's leading economic indicator for the month of September.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, notes, "Technically, the 4 hours chart for the GBP/USD pair shows that the price is pressuring its 20 SMA, while the technical indicators have continued retreating from overbought readings, and are about to cross their mid-lines towards the downside, suggesting the decline may extend on a break below 1.2250, the immediate support. The next one comes at 1.2200, while below this last, the pair can extend its decline down to 1.2160."

"Above 1.2290 on the other hand, the pair can go up to the 1.2330 region, a strong static resistance area. Further gains beyond it will likely trigger another corrective leg higher that can extend up to 1.2400."

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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