GBP/USD still weaker below 1.2450 level, awaits Fed minutes for fresh impetus

After failing to extend its up-move beyond 1.25 mark, the GBP/USD pair accelerated the reversal move and dropped to session low level near 1.2425 region.

The pair, however, has managed to bounce off few pips from daily lows and is currently trading around 1.2435-40 band as investors eagerly await the release of FOMC monetary policy meeting minutes, due later during NY session.

Earlier during European session, the pair failed to benefit from an upward revision of the UK GDP growth, showing q-o-q rise by 0.7% during the fourth-quarter of 2016 as compared to 0.6% estimated earlier. The upbeat growth figures, however, were negated by a downward revision of yearly growth to 1.8% from previous 2.0%. In addition to this, a marked slowdown in business investment, which unexpectedly fell 1.0% in the last quarter from 0.4% growth reported previously.

Market participants seemed disappointed by a sharp drop in business investment and preferred to unwind their bullish bets ahead of the next key event risk – the FOMC meeting minutes, due later during NY trading session.

Meanwhile, persistent greenback buying interest, with the key US Dollar Index placed at daily tops near 101.60 region, also collaborated to the pair’s reversal from an important psychological mark.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet notes, "There's a major Fibonacci resistance around 1.2540, from here the price has retreated steadily for most of this February, with tepid spikes beyond it being quickly reverted, which means that it would take some broad dollar weakness and really good news coming from the UK for the pair to break higher, and advance towards the 1.2600/20 region."

She further writes, "The pair has an immediate support at 1.2430, followed by 1.2380, where the pair has bottomed this last two weeks. Below this last, February low at 1.2345 comes next, as the level also stands for the 50% retracement of the latest daily bullish run."