GBP/USD trims gains, drops back to 1.3300 level

After being hammered for two consecutive days to multi-decade low, the GBP/USD pair attempted a tepid recovery on Tuesday and rose to 1.3370 region before retracing back to currently trade just above 1.3300 round figure mark.

Receding global risk-aversion is seen weighing on the US Dollar and assisting the GDP/USD pair to recover from near-term oversold conditions following an intense selling pressure on the back of unexpected outcome from last week's historic Brexit referendum. The recovery, however, is likely to remain limited as the economic implication of UK's decision to end its membership with the European Union might continue to fuel uncertainty and negative sentiment surrounding the British Pound.

Developments surrounding the referendum would continue to remain in focus as the UK PM Cameron will now meet EU leaders in a two-day European Council meeting in Brussels. Moreover, investors will also keep a close watch on today's European parliament's special session to discuss Brexit issue.

Meanwhile, traders today will also confront economic releases from the US, which includes final growth figure for the first quarter of 2016 and the release of Conference Board's Consumer Confidence index for June, that might provide some short-term trading opportunities.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, notes, "Overall, the risk remains towards the downside, albeit the pair may corrected higher on an advance above 1.3350, the immediate resistance, and extend then up to 1.3420. Above this last, Monday's high of  1.483 is the next possible bullish target."

"Below 1.3260, however, the risk turns towards the downside, with the pair then poised to extend its decline down to 1.3150."