GBP/USD confirms rejection at 1.2600 handle, hits fresh low

Having faced rejection near 1.2600 handle, the GBP/USD pair filled weekly bullish gap and dropped to fresh session low below mid-1.2500s during early European session.

A fresh wave of up-move in the US treasury bond yields helped the key US Dollar Index to reverse majority of its early losses led by Friday's disappointing US Q4 GDP print and the US President Donald Trump's executive order to ban travelers from seven Islamic countries. 

In absence of any market moving releases from UK, the US Dollar price dynamics remains an exclusive driver of the pair's movement on Monday. Hence, focus would remain on today's US economic releases, which include - the Fed's preferred inflation gauge - Core PCE Price Index, accompanied by the release of Personal Income / Spending data and followed by Pending Home Sales, due later during NA session.

This week’s key event risks also include monetary policy decisions from UK (BoE) and the US (Fed), along with the release of keenly watched NFP data from the US. Market sentiment would remain dependent on Trump’s protectionist stance and drive the pair’s movement ahead of this week’s key economic releases / events. 

Technical levels to watch

A follow through retracement below 1.2540 level is likely to accelerate the slide back towards 100-day SMA support near 1.2515-10 zone below which the pair seems vulnerable to head back towards 50-day SMA support near 1.2420 region. 

On the upside, 1.2600 handle now seems to have emerged as immediate hurdle, which if cleared as the potential to lift the pair towards 1.2630-35 horizontal resistance before attempting a move to surpass 1.2670 resistance and aim towards reclaiming 1.2700 handle.