GBP/USD plummets to 2-month lows, bears eyeing a break below 1.28 mark

The GBP/USD pair remained heavily offered and broke below 1.2840-30 support area to near-two month lows during early NA session on Tuesday.

The pair once again failed to clear 1.2910-20 strong supply zone and came under some renewed selling pressure amid broad based US Dollar strength. The greenback staged a smart recovery on Tuesday and was being supported by renewed optimism that the US President Donald Trump could set the stage to push tax cuts when Congress returns from its summer break. 

   •  US Dollar approaching 93.60 on Trump rumours

It is worth reporting that the ongoing US political drama, combined with fading prospects of any additional Fed rate hike action by the end of this year had been weighing on the greenback over the past few weeks. 

The selling pressure, however, seems to have abated for the time being, with the pair recovering around 15-20 pips from session lows near the 1.2810 region touched in the past hour. 

From a technical perspective, the pair has now broken down of a 4-day old trading range. In absence of any major market moving economic releases, a follow through weakness, even below the 1.2800 handle, now seems a distinct possibility.

   •  GBP: Cracks emerging - HSBC

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet writes: "Should the decline accelerate through 1.2831, last week's low, the pair has scope to extend its decline down to 1.2790, en route to the 1.2750 region, with the decline having more to do with Pound's weakness than dollar's strength."

"To the upside, 1.2880 is the immediate resistance, followed by the 1.2920/30 region, where selling interest remains strong" she added.