• Renewed USD buying interest prompts some fresh selling at higher levels.
• A modest retracement in the US bond yields might help limit sharp downside.
• A break below 1.3450 needed to confirm a fresh bearish breakdown.
The GBP/USD pair extended its retracement slide from an intraday high level of 1.3528 and is currently placed near session lows, around the 1.3480-85 band.
After a brief pause, the US Dollar buying interest seems to have picked up pace since the early European session and was seen as one of the key factors prompting some fresh selling around the major.
Meanwhile, investors now seemed to have digested the latest Brexit headline on Thursday, with the USD price action now turning out to be an exclusive driver of the pair’s momentum on the last trading day of the week.
Further downside, however, is likely to remain limited amid a modest retracement witnessed around the US Treasury bond yields, which might now cap any meaningful USD upsurge, at least for the time being.
Moreover, the recent range-bound price moves over two weeks or so also seems to suggest indecisive directional bias. Hence, traders are likely to wait for a decisive break in either direction before positioning for the pair’s near-term trajectory.
In absence of any major market moving economic releases, traders are likely to take cues from a scheduled speech by the Fed Governor Lael Brainard, due later during the early NA session.
Technical levels to watch
Any subsequent weakness is likely to find support near mid-1.3400s, which if broken would point to a fresh bearish breakdown and pave the way for an extension of the pair’s prior depreciating slide.
On the upside, any meaningful recovery attempts back above the 1.3520-25 immediate resistance might continue to confront resistance near the 1.3555-60 region (200-DMA), above the pair could head back towards retesting the 1.3600-10 supply zone.