GBP/USD bounces off 6-month lows

29 May, 2018

USD bulls take some breather and prompt some short-covering bounce. Brexit uncertainty keeps a lid on any meaningful recovery for the pair.

The GBP/USD pair found decent support near the 1.3200 handle and bounced nearly 70-pips from six-month lows touched earlier.

The US Dollar took some breather following today's strong upsurge to the 95.00 neighborhood, or fresh yearly tops, and was seen as one of the key factors that prompted some short-covering amid near-term oversold conditions. 

The rebound, however, was not backed by any obvious fundamental catalyst and hence, lacked any strong follow-through, with uncertainty around Brexit negotiations further collaborating towards keeping a lid on any meaningful recovery.

The pair has now retreated back to mid-1.3200s as traders now look forward to the release of Conference Board's consumer confidence index, the only highlight from today's thin US economic docket, for some fresh impetus.

Technical levels to watch

Weakness back below 1.3230 level might continue to find support near the 1.3200 handle, which if broken should pave the way for an extension of the pair's bearish trajectory. 

On the upside, recovery attempts beyond 1.3275-80 immediate hurdle might now confront fresh supply near the 1.3300 handle, above which a bout of short-covering could lift the pair further towards 1.3340 supply zone.

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