GBP/USD extends reversal from 1-month highs, tests yesterday's low

• US Dollar drops after US data but then recovers; DXY flat around 96.00. 
• Pound failed to hold to gains against greenback and euro. 
• Events ahead: Fed’s Powell speech at 17:00 GMT, BoE testimony on Wednesday. 

The GBP/USD pair rose earlier today to 1.2780, reaching the highest level in a month but it was rejected from above the upper limited of the previous trading range and pulled back in. It fell to 1.2707, level located slightly above Monday’s low. 

As of writing trades at 1.2715, with a bearish bias, looking into a test of the 1.2705/10 area. A break lower would expose 1.2700 and increased the bearish momentum. In the US, economic data released today came in below expectations (existing home sales and consumer confidence). The US Dollar dropped after the numbers and GBP/USD rebounded to 1.2730 but it quickly returned to the previous levels. 

Despite the weaker US Dollar, remains below the critical resistance seen around 1.2750/60. The political drama in the UK continues to limit any rally of the Pound. Attention continues to be on the leadership race. The favorite UK PM candidate Boris Johnson reiterated his plans for Brexit: leave the European Union by October 31, with or without a deal. 

Now traders await Fed Chair Powell's speech, expected at 17:00 GMT. Comments from NY Fed President John Williams did not include policy outlook. Ahead of Powell, Wall Street indexes are in red with the DOW JONES down 0.15% and the NASDAQ 0.65% amid geopolitical concerns.