“¢ Softer UK CPI dampens BoE rate hike prospects and prompts some aggressive selling.
“¢ Resurgent US Dollar demand adds to the bearish pressure and accelerates the downfall.
“¢ Investors’ now look forward to the latest FOMC meeting minutes for fresh impetus.
The GBP/USD pair remained under intense selling pressure through the mid-European session and tumbled to fresh five-month lows in the last hour.
The pair extended overnight rejection slide from the 1.3500 neighborhood and the downside picked up the pace during the European session following the release of softer UK consumer inflation figures. In fact, the headline CPI decelerate to 2.4% in April as compared to 2.5% y-o-y reading in March and further dampened prospects for a BoE rate hike over the next few months.
This coupled with resurgent US Dollar demand, despite the ongoing slump in the US Treasury bond yields, further added to the bearish pressure surrounding the major. Meanwhile, possibilities of some fresh technical selling, following a decisive break below the 1.3400 handle, could also be one of the factors contributing to the pair’s sharp slump since over the past few hours.
The pair has now dropped closer to the 1.3300 handle as investors now look forward to the release of latest FOMC meeting minutes, due later during the NY trading session, for clues over the central bank’s near-term monetary policy outlook and some fresh impetus.
Technical levels to watch
Bulls might try and defend the 1.3300 handle, which if broken now seems to pave the way for an extension of the pair’s bearish trajectory towards testing the 1.3200 round figure mark in the near-term.
On the upside, any meaningful recovery attempt now seems to confront resistance near the 1.3375-80 region and is followed by the 1.3400 handle, above which the pair could head towards 1.3450-60 supply zone.
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