Although off day’s low, GBP/USD seems vulnerable to further downside

The GBP/USD pair recovered from a downward spike to 1.4380 to move back above 1.4400 handle as traders position themselves for US monthly retail sales and consumer confidence data releases due later during NA session.

The US Dollar gained upside momentum after German CPI release, which continues to fuel concerns over a prolonged period of deflationary pressure in the Euro-zone.

In absence of any major economic releases from the UK, investors likely to keep the US Dollar bid tone on expectations of better economic releases from the US. Although the releases are unlikely have any material impact on the Fed rate-hike expectations but could still provide a temporary boost to the greenback.

From technical perspective, the pair has dropped below a short-term ascending trend-line support, suggesting that the pair might be done with the initial BoE bounce. The pair, however, has managed to hold a short-term descending trend-channel resistance break turned support, which if broke should open room for downward spiral for the pair.

Technical levels to watch

Sustained trade below a short-term ascending trend-line support near 1.4415 and a subsequent break below day's through near 1.4380 seems to drag the pair immediately towards 100-day SMA support near 1.4355-50, ahead of testing 50-day SMA support near 1.4335 region.

On the upside, 1.4440 might now act as immediate resistance, which if cleared is followed by resistance near 1.4475-80 region marked by H4 50-SMA. Only a sustained strength back above 1.4475-80 resistance would negate any bearish bias and assist the pair to extend its near-term upward trajectory.