GBP/USD retakes 1.35 mark but lacking follow through traction

The GBP/USD pair reversed an early dip to sub-1.35 level and has now rebounded over 50-pips from session lows. 

The pair's positive traction lacked any fundamental trigger and has happened despite of the prevalent stronger tone around the US Dollar. Meanwhile, some cross-driven strength, with the EUR/GBP cross challenging two-month lows support near the 0.8780-75 region, seems to be only factor behind the pair's up-move over the past couple.

The up-move, however, seemed losing momentum near 1.3530 level after the New York Fed President William Dudley said that continued gradual US policy tightening was appropriate as inflation is expected to move towards the 2.0% target over the medium term.

It, however, remains to be seen if the pair is able to build on the up-move or once again meets with some fresh supply as investors keenly await for any news coming out of the fourth round of Brexit negotiations.

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Looking at the broader picture, the pair has been oscillating within a broader trading band over the past six sessions and hence, it would be prudent to wait for a decisive break through the near-term range before committing to the pair’s next leg of directional move.

Technical levels to watch

Weakness back below the 1.3500-1.3490 region now seems to accelerate the fall towards 1.3450-45 important support, which if broken might turn the pair vulnerable to break below the 1.3400 handle.

Alternatively, sustained up-move beyond mid-1.3500s could get extended towards 1.3590-95 horizontal resistance, above which a bout of short-covering could lift the pair back towards yearly tops resistance near 1.3660 level.