GBP/USD drops below 1.3250, weighed down by BOE easing prospects

As the European trading session gets underway, the GBP/USD pair ran into fresh supply around 1.3330 resistance that dragged the pair back below 1.3300 handle to currently trade below 1.3250 level.

The pair is witnessing some profit-taking move after staging a remarkable recovery of over 500-pips from Brexit swing lows on easing political uncertainty after Theresa May was seen as the only contender to succeed the outgoing Prime Minister David Cameron.

Investors now seem to take a cautious stance ahead of Thursday's BOE monetary policy meeting. Majority of the market participants expect the central bank to announce a rate-cut and open doors for additional monetary easing, as early as in August, which might restrict any further recovery for the pair.

From technical perspective, the pair is reversing from its immediate important resistance near 1.3340 level, marking 23.6% Fibonacci retracement level of its Brexit-led sharp slide. Hence, a follow through selling pressure could force the pair to resume its downward trajectory.

Technical levels to watch

From current levels, 1.3200 round figure mark seems to extend immediate support, below which the pair seems vulnerable to drop below 1.3100 level and head towards testing 1.3050-40 support area. 

On the flip side, 1.3300 handle followed by 1.3340 remains immediate resistance levels to watch for. A convincing break through these resistance levels has the potential to boost the pair immediately towards 1.3475-horizontal resistance before the pair makes an attempt to reclaim 1.3500 psychological mark.