GBP/USD hammered down to 1.2600 handle, 2-week lows

   “¢   Resurgent USD demand prompts some aggressive selling on Wednesday.
   “¢   Bulls seemed rather unimpressed by today’s upbeat UK manufacturing PMI.

The USD continued gaining traction across the board, with the GBP/USD pair tumbling to 1.2600 handle, or two-week lows in the last hour.

After an initial uptick, the pair came under some intense selling pressure and extended Monday’s late retracement from 3-1/2 week tops, levels beyond the 1.2800 handle.  

Resurgent US Dollar demand, despite expectations of a dovish Fed in 2019 and the partial US government shutdown, was seen as one of the key factors behind the pair’s sharp intraday fall of over 170-pips.  

Traders largely shrugged off the upbeat release of UK manufacturing PMI, with the USD price dynamics turned out to be an exclusive driver of the pair’s heavily offered tone on the first trading day of the New Year.

The pair has now erased all of its gains recorded in the past three trading session and a follow-through weakness below the 1.2600 handle should pave the way for an extension of the downward trajectory.

Next on tap will be the second-tier release of US manufacturing PMI, which is unlikely to provide any meaningful impetus but will still be looked upon for some immediate respite for the GBP bulls.  

Technical levels to watch

On a sustained breakthrough the 1.2600 mark, the pair is likely to accelerate the slide towards 1.2565-55 intermediate support before eventually dropping to challenge the key 1.2500 psychological mark.

Meanwhile, any attempted rebound might now confront immediate resistance near the 1.2625 region, above which a bout of short-covering could lift the pair further towards reclaiming the 1.2700 handle.