GBP/USD: Downside playing out on risk-off and lack of fresh drivers

• Eyes on US-UK yield spread ahead of BOE.
• Next support seen near 1.3180 levels.
• Focus shifts to the US macro news.

The GBP/USD pair stalled its two-day rebound in Asian trades, as the bears fought back control amid resurgent USD demand and risk-off market profile.

GBP/USD: BOJ holds the key

Having run into stiff resistances located near 1.3215 region, the spot broke its consolidative mode to the downside, now extending lower just below 1.32 handle in a bid to test the next key support located at 1.3179/77, the confluence of 5 & 10-DMA.

The latest leg down in Cable can be mainly attributed to a tepid recovery staged by the US dollar across its main competitors, as the selling around Treasury yields stalls.

The greenback fell across the board in tandem with the US rates in the last US session, after the US political drama re-ignited on the Russia-Gate investigation, while reports of the US House of Representatives was considering the corporate tax cut to be applied gradually over a 5-year period, also weighed down on the buck.

Moreover, with the Asian traders reacting to the US political news and downbeat Chinese PMI reports, risk-off sentiment remains at full steam, collaborating to the renewed weakness seen in the risk-currency GBP.

Attention now turns towards the US macro updates, including the key CB consumer confidence, due later in the NA session amid a lack of fundamental drivers from the UK docket today.

GBP/USD Technical View

Valeria Bednarik, Chief Analyst at FXStreet explains: “Beyond 1.3220, the pair has scope to extend its recovery up to the 1.3260 level, while beyond this last, and approach to the 1.3300 figure seems likely. Below 1.3185, on the other hand, the 50% retracement of the same rally the risk turns back towards the downside. Support levels: 1.3180 1.3145 1.3100 Resistance levels: 1.3220 1.3260 1.3300.”