GBP/USD flirting with lows ahead of US data

Having faced rejection just above 1.2500 mark, the GBP/USD pair reversed part of Monday's strong gains and dropped to a session low level of 1.2423.

The pair has failed to register any meaningful recovery and maintained its offered tone near session low, around 1.2435 level, ahead of US economic releases. Earlier during European session, the pair came under renewed selling pressure after comments from EU's Verhofstadt, one of the Euro-zone's Brexit negotiators, agreed with UK Brexit minister David Davis' view on the need to complete the process of ending UK's membership with the European before the next EU parliament elections, thus leaving only 14-15 months window of negotiations. The comments resurfaced worries of 'hard Brexit' and weighed on the British Pound. 

Further downslide, however, was limited as the overall US Dollar Index was seen struggling to extend its recent up-surge to 13-year highs as investors now look forward to Wednesday's FOMC meeting minutes, which if reinforces market expectations of a December Fed rate-hike action might trigger a fresh leg of bullish momentum for the greenback and eventually drag the pair in the near-term.

In the meantime, today's release of existing home sales data from the US might provide short-term trading opportunities ahead of UK Autumn Statement on Wednesday, which would be followed by the release of durable goods orders and FOMC minutes from the US. 

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, notes, "the GBP/USD pair´s 4 hours chart shows that the price is extending to fresh daily lows after breaking below a flat 200 EMA, while technical indicators turned south within positive territory, gaining downward momentum. The 20 SMA in the mentioned time frame stands around 1.2400, offering an immediate support. Further slides below this last could see the pair extending its slide down to 1.2360, while further slides can extend down to the 1.2310/30 region." 

She further adds, "It would take an upward acceleration though the 1.2510 mentioned high to see the pair recovering further, up to the 1.2550/70 price zone."

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