GBP/USD surrenders early gains, 1.40 mark continues to cap
• US industrial production data beat expectations.
• A goodish USD rebound prompts some selling at higher levels.
• Traders await a decisive breakthrough near-term trading range.
The GBP/USD pair surrendered early gains to 1.3980 level and retreated back to neutral territory, below mid-1.3900s, during the early NA session.
A goodish US Dollar rebound, backed by an uptick in the US Treasury bond yields, was seen as one of the key factors behind the pair's quick drop of around 35-40 pips from session tops.
With markets still digesting the latest US political turmoil, today's upbeat US industrial production data helped revive the USD demand and continued capping the pair below the key 1.40 psychological mark.
Despite a good two-way move, the pair remained confined within a three-day-old broader trading range between the 1.3900-1.4000 handle. Hence, it would be prudent to wait for a decisive break in either direction before positioning for the pair's near-term trajectory.
Next on tap would be the release of Prelim UoM Consumer Sentiment index from the US, which again is unlikely to provide any meaningful impetus on the last trading day and as investors start repositioning for next week's key FOMC monetary policy meeting.
Technical outlook
Yohay Elam, Analyst at FXStreet writes: “Looking down, support below $1.3916 is at $1.3850, the February 22nd low. Further support is at $1.3770, the trough on March 8th.”
“Looking up, $1.4070 and $1.4160 were swing highs on February 26th and February 16th respectively”, he adds further.