• A strong follow-through USD recovery exerts prompts some profit-taking.
• Investors also seemed to have fully digested the recent Brexith optimism.
• Traders now look forward to the latest FOMC policy decision for fresh impetus.
The GBP/USD pair finally broke down of its Asian/early European session consolidation phase and broke below the 1.3100 handle in the last hour, erasing previous session's up-move to three-week tops.
After an initial uptick to mid-1.3100s, the pair met with some fresh supply and snapped three consecutive days of winning streak amid a strong follow-through US Dollar buying interest. Investors looked past the US midterm election results and the greenback recovered further from 2-1/2 week lows, which was eventually seen as one of the key factors prompting fresh selling around the major.
Meanwhile, market participants also seemed to have digested the latest Brexit optimism, with a report, via the Sun, saying that the UK PM May could ask for more time to cut a Brexit deal with Cabinet, exerting some additional downward pressure on the British Pound.
In the latest Brexit-related news, via Reuters - citing a government source, the UK Cabinet meeting on Brexit seems unlikely to take place ahead of next week and cast fresh doubt over the sticking point of Irish backstop.
In addition to this, traders also seemed inclined to lighten their bullish positions ahead of today's key event risk - the latest FOMC monetary policy update, and especially after the recent upsurge of over 450-pips from sub-1.2700 level touched on Oct. 31.
Technical levels to watch
A subsequent fall below overnight swing low level of 1.3073 is likely to accelerate the slide back towards 50/100-day SMA confluence support near the 1.3035-30 region before the pair eventually drops to the key 1.30 psychological mark.
On the flip side, the 1.3125 level now becomes an immediate hurdle, above which the pair is likely to surpass the 1.3175-80 supply zone and aim towards reclaiming the 1.3200 en-route its next major hurdle near the 1.3220-25 region.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD regains traction, recovers above 1.0700
EUR/USD regained its traction and turned positive on the day above 1.0700 in the American session. The US Dollar struggles to preserve its strength after the data from the US showed that the economy grew at a softer pace than expected in Q1.
GBP/USD returns to 1.2500 area in volatile session
GBP/USD reversed its direction and recovered to 1.2500 after falling to the 1.2450 area earlier in the day. Although markets remain risk-averse, the US Dollar struggles to find demand following the disappointing GDP data.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.
After the US close, it’s the Tokyo CPI
After the US close, it’s the Tokyo CPI, a reliable indicator of the national number and then the BoJ policy announcement. Tokyo CPI ex food and energy in Japan was a rise to 2.90% in March from 2.50%.