GBP/USD surrenders upbeat UK retail sales-led gains, back below mid-1.3500s

The GBP/USD pair faded upbeat UK data-led bullish spike, closer to yearly tops, and has retreated over 70-pips from levels beyond the 1.36 handle. 

The pair's sharp pull-back over the past couple of hours could be attributed to BOE Agents report, which highlighted demand growth slowdown across a number of consumer facing sectors and largely negated today's upbeat August retail sales data. 

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Adding to this, some pre-Fed repositioning trade, with traders inclined to lighten their bearish US Dollar bets might have also collaborated to the pair's retracement back to pre-release level, around the 1.3535-25 region. 

Next on tap would be the release of existing home sales data from the US, which is unlikely to provide any meaningful impetus ahead of the much awaited FOMC decision. 

As Valeria Bednarik, Chief Analyst at FXStreet writes: "The Pound has been kind of "ignoring" news from the US when they are dollar positive. That means that if the Federal Reserve disappoints, and given Pound latest strength, there's a good chance the pair will break towards the upside, while good news from the US, indeed can trigger a pullback, but limited when compared to other currencies, unless the Fed actually pulls the trigger and raise rates, a surprise that will catch everyone out of ward."

Technical levels to watch

Immediate support is pegged at the key 1.35 psychological mark, which is closely followed by weekly lows support near the 1.3470-65 region. On the upside, any up-move back above mid-1.3500s might continue to confront some fresh supply near the 1.36 handle, above which the pair is likely to aim towards retesting yearly tops resistance near the 1.3615-20 region.