GBP/USD reversal gains momentum, drops to fresh session low

Having faced rejection near 1.2500 psychological mark, the GBP/USD pair came under renewed selling pressure and has now dropped to a fresh session low near 1.2430 region.

In absence of any fresh trading cues (thin economic calendar), last week's hawkish Fed statement continues to underpin the greenback and has been the sole factor weighing on the major. Investors this week, however, will now focus on the final reading of US GDP growth for third quarter of 2016 on Thursday, which might influence market expectations of future Fed monetary policy stance and eventually provide fresh impetus for the pair's near-term trajectory. Meanwhile, expectations of stronger US economic growth, led by President-elect Donald Trump’s fiscal stimulus, might continue to lend support to the US Dollar and restrict any sharp immediate downslide for cable.

From technical perspective, the pair has already broken below a short-term ascending trend-channel and is now reversing from previous strong support, now turned immediate resistance, near 1.2500-1.2510 region. Hence, a follow through selling pressure below 50-day SMA immediate support would turn it vulnerable to continue drifting lower.

Technical levels to watch

Sustained weakness below 1.2415-10 region (50-day SMA) is likely to accelerate the slide towards 1.2380-75 area (multi-week lows) before aiming towards 1.2310-1.2300 strong support area. On the upside, 1.2475 level now seems to act as immediate resistance and is closely followed by a strong resistance near 1.2500-10 region.