GBP/USD hangs near yearly lows, below 1.35 handle

16 May 2018

   •  Persistent USD buying interest exerts downward pressure for the second straight day.
   •  A decisive break below 1.3450 support to confirm an extension of the downfall.

The GBP/USD pair extended its steady decline on Wednesday and drifted back closer to yearly lows touched in the previous session. 

Having repeatedly failed to build on its momentum beyond the 1.3600 handle, the pair traded with a negative bias for the second consecutive session on Wednesday and was weighed down by a strong follow-through US Dollar upsurge.

In absence of any major market moving economic releases from the UK, the USD price dynamics turned out to be an exclusive driver of the pair's momentum through the European trading session on Wednesday. 

The pair, however, has been showing resilience at lower levels and finding some decent support near the 1.3460-50 region. Hence, it would be prudent to wait for a decisive break through the mentioned support before positioning for the pair's next leg of depreciating slide.

Next on tap would be the US economic docket, featuring the release of housing market data, which along with Atlanta Fed President Raphael Bostic's scheduled speech will be looked upon for some fresh impetus. 

Technical levels to watch

The 1.3450 area might continue to act as an immediate support, which if broken could prompt some aggressive selling and accelerate the fall towards the 1.3400-1.3390 horizontal support. On the flip side, any up-move beyond the key 1.3500 psychological mark is likely to confront resistance near the 1.3515-20 region, above which a bout of short-covering could lift the pair further towards 200-day SMA barrier near mid-1.3500s.

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