GBP/USD erases early strong gains, back below mid-1.4200s

   •  A modest USD rebound prompts some profit-taking.
   •  Overbought conditions add to the long-unwinding pressure.
   •  Downside still seems limited amid Brexit optimism.

The GBP/USD pair failed to build on its early strong up-move beyond the 1.4300 handle and has now retreated nearly 100-pips from session tops. 

The US Dollar selling pressure seems to have exhausted, at least for the time being and might have prompted traders to take some profits off the table, especially after the recent upsurge of over 450-pips since the beginning of this week. 

Apart from a modes USD rebound, led by comments from IMF's Lagarde and the US Treasury secretary Steven Mnuchin, the pair's sharp retracement over the past hour or so could also be attributed to some technical selling amid extremely near-term overbought conditions. 

Meanwhile, Wednesday's upbeat UK jobs report, showing that the employment rate reached its highest level since the records began in 1971, coupled with optimism over a favourable divorce deal with the EU might continue to underpin the British Pound. 

Moreover, bulls might also be encouraged by the UK Chancellor of the Exchequer, Philip Hammond's comments, saying that he is very happy with where the British Pound is currently trading, which should help limit any deeper corrective slide.

In absence of any major market moving economic releases from the UK, traders would now take cues from the US new home sales data, due later during the early NA session.

Technical levels to watch

Any subsequent retracement is likely to find support near the 1.4210-1.4200 region, which if broken might trigger additional long-unwinding trade and pave the way for an extension of the pair's corrective slide.

On the upside, the 1.4300 handle might continue to act as an immediate hurdle, above which the bullish momentum could get extended towards the 1.4400 mark with some intermediate resistance near the 1.4360 region.