GBP/USD turns lower, trying to defend 1.2600 mark

The GBP/USD pair reversed all of its early gains to 1.2700 handle and dropped below 1.2600 mark amid ECB-led volatility in the FX market. The pair, however, has managed to bounce off session low and is currently trading with mild negative bias around 1.2610 region.

The European Central Bank (ECB) announced its latest monetary policy on Thursday and left its key benchmark interest rates unchanged. The central bank announced extension of its asset purchase program, at €80 billion per month until April 2017 and tapered it to €60bn per month until Dec. 2017. After initial bullish reaction, the shared currency came under intense selling pressure, lifting the greenback across the board. In fact the overall US Dollar Index reversed all of its prior losses to sub-100.00 level and turned sharply higher.

The spillover effect also weighed on the GBP/USD major and the pair drifted into negative territory for third consecutive session. Adding to this, US weekly jobless claims fell 10,000 to 258k for week ended Dec. 2 and added on to the prevalent bullish sentiment surrounding the greenback, eventually dragging the pair further into negative territory.

From technical perspective, the pair's rejection from just below 100-day SMA resistance, and subsequent failed attempt to clear immediate strong hurdle near 1.2700 handle, is pointing towards further downslide in the near-term.

Technical levels to watch

Sustained weakness back below 1.2600 round figure mark should now drag the pair below 1.2570 intermediate support towards its next support near 1.2535 region. On the upside, any recovery attempts might now confront immediate resistance near 1.2640, which is closely followed by a strong resistance near 1.2670 region. Only a decisive move back above 1.2670 resistance might now negate the near-term bearish bias.