GBP/USD trying to defend 1.2400 handle

The GBP/USD pair came under some renewed selling pressure on Tuesday and dropped to 1.2400 handle amid resurgent greenback buying interest. The selling pressure, however, seems to have abated, helping the pair to bounce off lows and defend 1.2400 handle for the time being.

Against the backdrop of broad based US Dollar strength, in wake of Monday's hawkish comments from the Philadelphia Federal Reserve Bank President Patrick Harker, spot accelerated the downslide in absence of any hawkish comments from BOE Governor and MPC members' testimony on inflation and the economic outlook (inflation report hearings) before Parliament's Treasury Committee.

Recent hawkish rhetoric from various FOMC member, including the Fed Chair Janet Yellen during her testimony, seems to have revived hopes for an eventually Fed rate-hike action in March. Market expectation continues to drive the US treasury bond yields higher and seems to have reignited the US Dollar's strong bullish momentum.

Hence, Tuesday’s key focus would remain on speeches from various Fed officials, which would be scrutinized for fresh hints about March rate-hike move and eventually provide some impetus for the pair ahead of the FOMC meeting minutes on Wednesday.

Technical levels to watch

Bulls would be disheartened if the pair failed to defend 1.2400 handle below which a fresh leg of weakness is likely to accelerate the slide towards 1.2365 intermediate support, en-route 1.2300 round figure mark.
 
Meanwhile on the up-side, any recovery now seems to confront resistance near 1.2440-45 area, which if cleared might assist the pair back towards 1.2480-85 resistance. Any subsequent up-move above 1.2480 level might continue to be capped at 1.2500 psychological mark and only a decisive break through this hurdle would negate any near-term bearish bias.