• A modest USD weakness prompts some short-covering move.
• Technically seems vulnerable to extend the recent downfall.
The GBP/USD pair staged a goodish rebound on Friday and has now recovered a part of previous session's slide to over 1-week lows.
The pair stalled this corrective slide from near 2-month tops and managed to defend the key 1.40 psychological mark on the back of a subdued US Dollar price action, which forced traders to lighten their bearish bets amid holiday-thinned liquidity conditions.
With investors looking past the recent positive news over the Brexit transition deal and a hawkish BoE vote, the USD price dynamics has now been acting as an exclusive driver of the pair's momentum since the beginning of this week.
Apart from a modest greenback weakness, the uptick lacked any obvious trigger and hence, it would now be interesting to see if the pair is able to build on the momentum or the move is utilized as an opportunity to initiate some fresh short positions.
Even from a technical perspective, the pair on Thursday broke below a short-term ascending trend-channel support and remains vulnerable to extend its near-term bearish trajectory, suggesting any meaningful recovery attempts are likely to be short-lived.
Technical levels to watch
Immediate resistance is now pegged near the 1.4075 level and is followed by the 1.4100 handle, above which the pair could recover back towards the 1.4135-40 supply zone. On the flip side, the 1.4015-10 area now seems to have emerged as an immediate support, which if broken might prompt some additional weakness towards the 1.3965-60 horizontal zone.
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